CLC v. SKW

FCMC 12118 / 2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 12118 OF 2010

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BETWEEN

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JUDGMENT
(Maintenance Pending Suit and interim maintenance)

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1.  This is an application by a petitioner wife for maintenance pending suit for herself, pursuant to section 3 of the Matrimonial Proceedings and Property Ordinance, Cap 192 and for interim maintenance for the three children of the family, a boy who is now aged 8 and two girls aged 6 and nearly 4 respectively, pursuant to section 5 of the Matrimonial Proceedings and Property Ordinance, Cap 192.

Issues

There two main issues to be determined namely

 a) how much maintenance, if any at all, should be paid by the husband to the wife for her own maintenance and that of the children?

b) should the husband be ordered to pay maintenance retrospectively for the period from 1 January 2010 – 30 November 2010 in the sum of HK$495,000?  

Background to the marriage and the litigation generally

2.  By way of background, the parties married in September 2002 and the divorce petition was issued on 16 September 2010.  The wife makes very serious allegations against the husband in the petition, including allegations of violence and sexual assault. Unfortunately this has set the tone for the proceedings generally and the parties have been in and out of court on a regular basis since the petition was first issued. On the 17 November 2010 the wife issued a summons for maintenance pending suit seeking inter alia maintenance for herself in the sum of HK$15,000 per month and maintenance for the three children of the family in the sum of HK$10,000 per month each – i.e. HK$45,000 per month in total plus payment of HK$495,000 being maintenance for the period from before the petition was issued. She has not asked for maintenance to be backdated otherwise. On the 2 December 2010 the wife obtained an injunction preventing the removal of funds from certain bank accounts held by the husband. As will be seen, this application came a little too late. On the 3 January 2011 the husband applied for interim reasonable access to the three children, to be supervised once a week by the Social Welfare Department. Orders were made for a clinical psychologists report as well as an updated social welfare report. On the 28 March 2011 the parties agreed by consent to adjourn the substantive hearing for maintenance pending suit/interim maintenance. The clinical psychologists report was filed on the 15 July 2011. It makes for very difficult reading. It states inter alia

The most controversial issue in this assessment was the mother’s repeated allegation of the father having sexually abused the three children.  However, there were no conclusive evidence to substantiate the alleged sexual abuses as genuine abuses in the two multi-Disciplinary Case Conference on Suspected Child Abuse and the Police’s investigation was negative.  The anger and rejection towards the father that expressed by the children seemed more related to the loyalty conflicts towards parents and the mother’s anxiety.

The mother harboured intense sense of victimization in the demised marriage.  She felt disrespect, not being cared and maltreated by Mr. S.  She regarded her ex-husband was the one who had destroyed the family.  Described the father as a bad husband and father, she focused only on his weakness but without any strength.  She seemed want to cut off any tie with the ex-husband and see any influence or interference from him as negative.  She was determined and enjoyed to mother the three children with the support from her maiden family.  She perceived that she was more competent and in control when she parents the children on her own.  This stance may hamper her capacity to understand the needs of her children to maintain relationship with their father which was importance for their development. Though the parents impressed one to be love and concerned about their children, their intense conflicts and mistrust towards each other had blocked their communication to discuss what the best are for their children.  The mother was reserved about the arrangement of future access and further psychotherapy for her children, which will interrupt their activities and causes troubles to them.

3.  The updated SWR dated the 18 July 2011 recommends that the petitioner be granted sole custody with supervised access to the respondent and that a progress report be filed in 9 months time.

4.  On the 22 July 2011 the issue of custody was adjourned until the 25 May 2012. Interim supervised access was to take place in the meantime. The children continue to reside with the wife.

5.  The husband’s position is that the tensions within the marriage were because each party had a very different approach to parenting. He denies ever abusing his children, sexually or otherwise and accuses the wife of over scheduling the children and of punishing them physically.

6.  I have not had the opportunity to hear each party’s respective applications in relation to the children and therefore I have not been in a position to make definitive findings one way or another with respect to each party’s allegations. Suffice it to say that the parties are now embroiled in overly litigious proceedings, which will ultimately not be to anyone’s benefit, least of all the children.

7.  In any event the wife has since sought to reactivate her application for maintenance pending suit/interim maintenance.

8.  The decree nisi was pronounced on the 1 December 2010. As I have said issues pertaining to the children return to court in May.

The maintenance pending suit/interim maintenance application   

9.  The wife initially said that the husband had refused to pay her any maintenance at all since the 1 January 2010. Later she acknowledged that she had received HK$112,712 for September – December 2010. She also received an additional HK$20,000 in July 2010. She says that the husband has funds at his disposal and that he was until recently running a logistics business known as A Logistics and B Logistics.  The husband says that this was and always has been the wife’s business. Each party makes allegations against the other in relation to these companies.  It is not possible for me to determine absolutely at this stage what the position might be in relation to them.  Suffice it to say that the husband no longer works for either company.  The wife continues to be the sole proprietor of both. She previously worked in the companies and used to take care of the paper work. She says that her involvement has diminished since she had the children. It seems that the companies have ceased operation. I am not sure of their present status.

10.  The wife also intends to pursue an application to set aside a disposition made by the husband i.e. a transfer of property to his niece. She also believes that the husband has set up another business “C” and that work has been diverted from A Logistics and B Logistics to C. In addition she alleges that the husband has siphoned off c HK10 million of family assets for his own purposes and to defeat her claim for ancillary relief.

11.  According to the wife’s original Form E she had at that stage (i.e. 26 November 2010) over HK$1 million in cash in various bank accounts, plus other investments of c HK$1.2 million. She says that other funds in the sum of just over HK$2 million are held in trust for her mother. The husband challenges the assertion with respect to the funds allegedly held in trust for the mother.

12.  The husband’s said in relation to A Logistics and B Logistics that

29. It is true for her to say that A Logistics’ gains/net receipts vary from several ten thousand to several hundred thousand dollars a month.  All gains/net receipts have been deposited into the firm’s bank account (no. xxx-xxxxxx-xxx with Hang Seng Bank) which can only be operated by the Petitioner.  Unless there was available cash, the Petitioner would draw cheques to settle business debts or expenses from the firm’s account.  I am never an authorized signatory.

30. In spite of our separation, I deposited a total of HK$1,314,322 into A Logistics’ bank account in August 2010 and September 2010, and HK$466,913 in October 2010.  She stopped paying me any salary from October 2010.  She further put my integrity at stake by refusing to settle a business expense of USD13, 320 due to E, a business partner/contractor in Cambodia brought in by me.  It was only after my Solicitors had sent a demand letter to hers on 9^th October 2010 that she settled the debt.  Copies of E’s and my Solicitors’ demand letters are now produced and shown to me as exhibit marked “SKW-5”.

31. I assume the Petitioner has fired me (though without formal notice) but I still deposited business receipts into the firm’s account whenever I received them: HK$414,301 in November 2010 and HK$113,239.20 in December 2010.

…

39. I have no more money to pay her whether as maintenance pending suit or otherwise.  She should have told the Court of my continual payments of large sums of money into A Logistics’ bank account and that she is the sole signatory.  After deducting business expenses and debts, the balance should still be enough to meet her requested maintenance of HK$45,000 per month for 2 years.  I oppose her application for maintenance pending suit and interim maintenance.

13.  That remains his position. Further he claims to have gambled away other funds previously held by him, in Macau. He says that he gambled away approximately HK$10 million and that he has no further funds available. He also complains of having an “adjustment disorder” and says that he was until recently certified medically unfit to work. He now claims to be working on the mainland earning a base salary of RMB8, 000 per month.        

14.  The wife says

3. The Respondent has drained away A Logistics money and the family asset since or about January 2010.  The Respondent alleges that he has gambled away all his assets about HK$12 millions which I do not believe.  While I do not know the whereabouts of the said HK$12 million, I believe that the Respondent still has the said sum of HK$12 million.  In the alternative, I will request this Honourable Court to consider the Respondent’s alleged gambling as part of his relevant conducts when doing the exercising under section 7 of the Matrimonial Property and Proceedings Ordinance (Cap.192, Laws of Hong Kong).

She added

48. Upon further investigation, I noted that the Respondent’s mother has bought a flat on 5^th October 2010 immediately after the Respondent withdrew all money from his personal account.  There is now produced and shown to me a copy land search exhibited hereto and marked as “CC-26”.

15.  Time will tell whether the wife’s assertions are correct. No further applications have been made as yet with respect to this particular property.  She also argues that the husband previously had access to a large monthly income from various sources.  I am not at present convinced that this is the case. Again further information on this will be required. The husband denies that he was the recipient of other funds.

16.  Thus the wife now maintains that she has no income at all and the husband says that he has a minimal income. Both sides accept that the wife historically needed HK$45,000 per month to maintain the family. The husband’s case, simply put, is that he cannot afford to pay that sum and that he has no other financial resources from which to meet such payments.  

Discussion

How much maintenance, if any at all, should be paid by the husband to the wife for her own maintenance and that of the children?

The Law

17.  Applications of this nature are governed, as I have said, by section 3 and section 5 of the Matrimonial Proceedings and Property Ordinance, Cap.192, which states that the only governing principle is that the court will make such order as it considers reasonable in all of the circumstances of the case.  Consequently, maintenance pending suit applications and similarly interim maintenance applications are approached on a broad-brush basis.  A detailed examination of the party’s means will be considered at a later date at a full ancillary relief hearing if agreement is not reached in the meantime.  Any overpayment or underpayment may be dealt with then.  

In practice, as oral evidence is rarely given, it will be unusual for the court on an application for maintenance pending suit to be in a position to make findings of fact on issues in dispute sufficient, for example, to deal with conduct or allegations of non disclosure.  However, if it is demonstrated that the paying party has not performed his duty to make full and frank disclosure of his financial resources, then the court can take a broad and robust view of his means, and it does not have to accept and proceed on the basis of the assertions of the paying party as to his means and an inability to pay.  The court can look at the reality of the situation and take into account voluntary funding from third parties. Any under provision or over provision in the order for maintenance pending suit can always be corrected when the account comes to be taken at the substantive hearing when there are every opportunity to do fairness by set off ……”

(Ref paragraphs 16.18 of Rayden, 18^th edition).

18.  As counsel for the wife pointed out, generally speaking one is concerned on an application such as this with the needs of the wife, the standard of living enjoyed by the parties previously and the ability of the husband to pay (see C v F [2006] HKFLR 4).

Financial resources available to the parties

19.  I should say at the outset that I have had some difficulty with the case advanced by each side, but particularly with that advanced by the husband.

20.  The husband puts forward the argument that he should not be obliged to pay the wife any maintenance at all either for herself or the children because

a)  He has no money left because he has gambled it all away in Macau.

b)  He is now earning so little that he cannot afford to pay the wife a reasonable amount.

c)  She has sufficient funds from the monies already paid into A Logistics and B Logistics by the husband to keep her going for at least two years.

21.  Turning first to the gambling point – although it is clear that the husband withdrew large sums of money from his bank accounts during the period from July 2010 – October 2010, there is no direct evidence that these monies were gambled away. I am asked to believe that the husband did this because he was depressed. Again there is no evidence of actual depression and even if there were that does not necessarily support his assertions on gambling. Logically one does not automatically follow the other. The husband points to the fact that he travelled to Macau a lot during the period from October – December 2010. This statement has an element of litigation window dressing about it. In any event by the end of September 2010, before the travel record produced began, on the wife’s case over HK$9 million had already been withdrawn by the husband from his accounts. This was before the wife’s injunction application had taken effect. It belies belief that the husband has gambled this money away. Put simply I do not believe what he says. On the face of it, it seems that the husband set about systematically emptying his accounts. I am satisfied in the circumstances that it is appropriate for me to draw an adverse inference against the husband, which I will now do. I am of the view that he should now have access to some if not all of these funds.

22.  The husband also says that he is working on the Mainland and earning very little. The wife says that he has set up a new logistics business called C (HK) Logistics Ltd Incorporated “C” and that he has diverted contracts to the new business. Whether or not that is true remains to be seen.  In any event it seems to me that the husband certainly has a greater earning capacity than the figure of RMB 8,000 per month suggested by him and that this is something that I can and should take into account.     

23.  Lastly the husband argues that the wife has access to funds because of monies paid into A Logistics and B Logistics and/or that she has assets sufficient to support herself and the children in any event. This aspect of the case concerned me and I ordered that the wife produce all up to date bank statements held by her personally or in the name of A Logistics and B Logistics by close of business on the 9 January 2012. From those statements it seems that the wife now has remaining cash assets of c HK$335,000 plus securities of just under HK$840,000.Thus on the face of it she has spent in the region of HK$1,025,000. Of that according to her up to date costs estimate dated the 4 January 2012 she has spent at least HK$407,071 on legal fees. This did not include a sum for the period from 4 March – 13 June 2011. In round figures this leaves a balance of approximately HK$618,000 or just under HK$45,000 per month spent by the wife over a 14 month period. The husband still complains that the wife’s disclosure is inadequate. He maintains his stance that the wife has had the benefit of HK$2.3 million paid into the accounts of A Logistics and B Logistics between August – December 2010, of which HK$700,000 would actually have been available to her in cash once debts and business expenses had been paid. The wife denies this.

24.  All in all I accept that the wife has some liquid assets still available to her. I am inclined to accept, on the balance of probabilities, that she would as the sole signatory of A Logistics and B Logistics also have had access to other funds – the exact amount of which is unknown.  I also accept that she has an earning capacity – although this is likely to be more limited than that of the husband. In accepting this I have also taken on board the fact that even on the husband’s own case the wife has only had access to c HK$700,000 net from the companies. This is a relatively small sum when compared to the HK$10 million that the husband has had access to. 

The needs of the wife and the children

25.  The wife asks for HK$45,000 per month. Her schedule of outgoings as set out in her Form E totals HK$52,230 per month. The husband does not challenge these expenses. However at first blush the expenses for the children seem rather high – especially the extra tuition fees in the sum of HK$14,060 per month.  Notwithstanding that I will accept the wife’s estimate of HK$45,000 per month. This also seems to be in keeping with her actual needs when compared to the actual amount that she has spent over the last 14 month period.

Conclusion

26.  I am approaching this application on the premise that the wife has utilized some of her liquid assets in order to support herself and the children. I accept that she has some limited assets left. In so far as the husband is concerned I have found that he has approximately HK$10 million at his disposal and that his earning capacity is more significant than he has declared. It seems to me that he does have the ability to pay the wife what she seeks with respect to the monthly amount sought and that he should do so now on an interim basis pending either a Financial Dispute Resolution hearing and/or trial.    

Should the husband be ordered to pay maintenance retrospectively for the period from 1 January 2010 – 30 November 2010 in the sum of HK$495,000?  

The law

27.  It is not possible for the court to order an interim lump sum payment. In so far as maintenance pending suit is concerned it is accepted that

16.13   On a petition for divorce, … the court may make an order for maintenance pending suit, and the statute in terms provides that this means an order requiring 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 presentation of the petition and ending with the date of the determination of the suit, as the court thinks reasonable.  This means that during the pendency of a suit … in the case of divorce … before it is heard or after a decree nisi has been granted but before it has been made absolute, the court may order one spouse to pay to the other maintenance pending suit.  This is the only form of financial provision which can be ordered until a decree nisi of divorce … is pronounced: there is no power to make an interim order for the sale of property, nor power to make an order for an interim lump sum.

(Ref paragraphs 16.13 of Rayden, 18^th edition).

28.  Therefore the wife’s application for maintenance pending suit governing the period before the divorce petition was issued must fail. She has not sought to backdate the maintenance to the date of the petition. In any event, even had that not been the case I do not believe that this is a suitable case for backdating. There are many factual disputes between the parties that will need to be determined before the court is able to consider the matter fully. This includes the extent to which the wife has been able to rely on funds from the companies in order to support both her and the children in the medium to short term.  Going forward I am satisfied that she needs HK$45,000 per month and that the husband does have the means to pay that sum if not from income then from the other financial resources available to him.

Costs

29.  Given the circumstances here I will reserve costs for the time being.

Order

30.  Consequently having read both sides Form E’s and other affirmations filed in support together with the Requests for Further and Better Particulars and having read and heard the submissions from both parties’ lawyers, I will make an order in the following terms:

1)  The Respondent husband do pay the Petitioner wife maintenance pending suit for herself in the sum of HK$15,000 per month, the first payment to be made on the 1 March 2012 and thereafter to be paid on the first day of each succeeding month until further order.

2)  The Respondent husband do pay the Petitioner wife interim maintenance for the three children of the family in the sum of HK$10,000 per month per child, the first payment to be made on the 1^st March 2012 and thereafter to be paid on the first day of each succeeding month until further order.

3)  Costs shall be reserved.

4)  The First Appointment hearing shall be adjourned to the 25 May 2012 at 9:30 a.m.