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FCMC 13698 / 2013
[2019] HKFC 292
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES
NUMBER 13698 OF 2013
________________________
BETWEEN
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ALDL |
Petitioner |
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and |
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FTFC |
1st Respondent |
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and |
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TMPM |
2nd Respondent |
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| Coram: |
District Judge A. Tse in Chambers (Not Open to Public) |
| Date of Hearing: |
28 May 2018, 27 August 2018 and 21 December 2018 |
| Date of Judgment: | 22 November 2019 |
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J U D G M E N T
(Variation of Maintenance Pending Suit)
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1. This is the Petitioner Wife’s application for inter alia:
(1) An upward adjustment of the maintenance pending suit order dated 26 February 2015 from HK$125,000 per month to HK$230,000 per month; and
(2) Legal costs contribution in the sum of HK$3.6 million or alternatively a monthly sum of HK$300,000 for 12 months for the period leading up to the Financial Dispute Resolution hearing (the FDR).
Issues
2. The 1st Respondent Husband does not dispute that there should be an upward adjustment of the maintenance pending suit or that he has the ability to pay the amount requested. The only issues are quantum and the method of payment.
3. The Husband says that the Wife’s claim for upward variation by more than HK$105,000 per month is manifestly excessive and there has been no material change of circumstances that would justify the significant increase in her purported expenses. The Husband proposed to adjust the sum to HK$126,500 per month, i.e. An upward adjustment of HK$1,500 per month.
4. As for legal costs contribution, the Husband says that the parties had already reached a conclusive and binding agreement for the provision of HK$3.6 million to the Wife by way of a bank loan to be secured against the Wife’s home and only property. The Husband agreed to act as guarantor and he undertook to repay the mortgage loan. In those circumstances, he says that the Wife should not be allowed to unilaterally back out of that agreement. Alternatively, if the Court were to allow the Wife to disregard the agreement, he says that the Wife’s assessment of HK$3.6 million is excessive and unreasonable. He offered HK$600,000 up to the FDR.
Background of the Marriage
5. Both parties were born in 1964 and are now 56 years old. The Husband was born in Hong Kong to very humble beginnings. He was educated in Hong Kong until he completed matriculation. Although his matriculation results were not very good, an opportunity arose when he was in Form 6 where he and his elder sister could study high school in Australia. Because of financial constraints, his elder sister had to give up this opportunity. The Husband went to Australia alone to attend high school in 1983. He was subsequently offered a place to study medicine in a university in Australia. He began reading medicine in 1984. At the same time, he had to work part time to subsidize his expenses.
6. The Wife and her family had emigrated to Australia. She met the Husband in 1984, when she was studying for her Honour’s degree in Occupational Therapy. The parties started serious dating in 1986 and the Husband was introduced to the Wife’s family. The Wife’s late father was very fond of the Husband and had great sympathy for him. Although the parties were not yet married, the Wife’s father invited the Husband to move in with them to alleviate the Husband’s financial burden. At the time, the Husband expressed his concerns about the political situation in Hong Kong after 1997. Although the Husband had yet to complete his studies, the Wife’s father suggested that the parties should get married to enable the Husband to become an Australian resident. As a result, the parties were married in October 1987. However, they only held their church wedding in 1990 after the Husband completed his studies.
7. In the meantime, the Wife and her family continued to render assistance to the Husband and his family. The Husband wanted to bring his entire family to Australia under the “family union” category which required no investment. At the time, the requirement for “family reunion” was that there at least two immediate members of the applicant’s family had to be Australian permanent residents or citizens. Upon the Husband’s request, the Wife’s father arranged for the Wife’s younger brother to marry the Husband’s younger sister. However, after the Husband’s family returned to Hong Kong after they obtained citizenship. The marriage between the Wife’s brother and the Husband’s sister also ended in divorce.
8. The Wife graduated from university in mid-1988. She immediately started working. She became the sole bread winner and was responsible for the parties’ expenses, including mortgage repayments of their property in Australia. Although the Husband’s mother gave the parties a gift of AUD $120,000 as a down payment for their property in Australia, the parties continued to live with the Wife’s parents and used their own property for rental income.
9. In 1991, upon the Husband’s request, the parties came back to Hong Kong to enable the Husband to receive specialist training and further his career. He obtained his qualification as a specialist in Anaesthesia in 1998.
10. On the other hand, because of the move, the Wife gave up her place in a 3-year full time PhD programme with full scholarship assistance in Australia. She got an academic position in one of the Universities in Hong Kong. She enrolled in the PhD programme in Hong Kong in 1994 and received her PhD in 2000. She was promoted to Assistant Professor in 1995. Their income was deposited into their joint account.
11. After their arrival in Hong Kong, the parties initially lived with the Husband’s mother. They later rented and bought a flat in the same estate. In 1992, the parties moved into quarters provided by the University which was 1,400 sq.ft. Their initial property was sold and the proceeds were used to purchase the former matrimonial home in their joint names in 1995. In 1997, they purchased a car park at the former matrimonial home in their joint names. Between 1993 and 1996, the parties also purchased 2 properties in Australia. These properties were soon sold.
12. In about April 2006, the Husband left the employment of the Hospital Authority and received superannuation of over HK$2.3 million. At about the same time, he began to stay away from the former matrimonial home with increasing frequency. However, he would still return about once a week. They continued to sleep in the same bed and the Wife continued to cook and do laundry for him. The Wife says that she confronted the Husband about this and he admitted to having an extra-marital affair. This was denied by the Husband. Instead of paying his entire earnings into their joint account, the Husband began to pay HK$150,000 (which he alleged to be half of his income) into the joint account as maintenance for the Wife. The Wife says that the Husband was in fact earning a lot more than HK$300,000 per month at the time.
13. The Wife says that in about 2007 or 2008, she contracted a chronic medical condition called “Myalgic Encephalomyelitis”, more commonly known as “Chronic Fatigue Syndrome” (CFS). The Husband accepts that this illness or condition exists but denies that the Wife is suffering from it. In June 2009, the Wife resigned from the University and basically became financially dependent on the Husband.
14. In July 2012, the Husband ceased to return to the former matrimonial home. He alleges that the parties reached a full and final agreement on the distribution of assets. This is denied by the Wife. The former matrimonial home was sold to the Husband’s mother for HK$6.3 million (which the Wife alleges to be at an under value). The proceeds of sale of the former matrimonial home and other family properties were paid to the Wife. This was used by the Wife to purchase her present home in September 2012 for a consideration of HK$12,500,000. The purchase was completed on 2 January 2013.
These Proceedings
15. In about March 2013, the Husband ceased to make any further payments into the joint account. The Wife petitioned for divorce on 10 April 2013. Although the Husband was informed of the intention to take out these proceedings by both the Wife and her solicitors, and arrangements were made with the Husband for service, service was initially unsuccessful. The Husband was finally served on 23 April 2013.
16. The Husband filed his Form E on 18 June 2013 where he failed to provide the requisite information and documents. From then on, the Wife was put through a protracted and arduous process of discovery. The Husband also denied that he has ever had an extra-marital relationship with the 2nd Respondent. His relationship was only admitted a year after the commencement of these proceedings.
17. It is now known that the Husband has been having an affair with the 2nd Respondent at the latest by 2002 and that he has been giving her substantial amounts of money over the years and those funds have been used to purchase a number of properties:
(1) On 9 December 2002 and 8 June 2001, the Husband paid HK$207,000 and HK$122,800 respectively to the 2nd Respondent with funds out of his joint account with the Wife (the Joint Account). On 27 August 2003, the 2nd Respondent entered into an agreement for the purchase of a property in 49A B Garden (49A) for a consideration of HK$2,002,000. On 8 September 2003, the Husband paid a further sum of HK$133,000 to the 2nd Respondent from the Joint Account. On 9 October 2003, the Husband paid HK$200,000 to the 2nd Respondent. On the same day, the purchase of 49A was completed. The Husband changed his correspondence address to 49A and had some of his mail redirected from the former matrimonial home to this address (including the bank statements of the parties’ joint account);
(2) On 15 July 2005 and 20 September 2005, the Husband paid HK$49,500 and HK$160,000 respectively to the 2nd Respondent from the Joint Account. In about April 2006, the Husband left the employment of the Hospital Authority and received superannuation of over HK$2.3 million. On 14 July 2006, the 2nd Respondent entered into an agreement for the purchase of a property at 52G of B Garden (52G) for a consideration of HK$3,950,000. The purchase was completed with the assistance of a mortgage on 15 August 2006;
(3) On 20 December 2006, the Husband purchased a property in Metro Town (the Metro Town property) in joint names with his mother for a consideration of HK$7,048,000. This property was subsequently sold on 27 September 2012 for HK$9,100,000;
(4) On 8 March 2007, a property in Lai Chi Kok (Flat H) was purchased with the assistance of a mortgage. The three party mortgage deed showed that the 2nd Respondent was the mortgagor whilst the Husband and the 2nd Respondent were the borrowers. This property was sold for a consideration of HK$5,400,000 on 8 October 2012;
(5) On 4 February 2009, the 2nd Respondent entered into a provisional agreement for the purchase of a property (Flat E) for a consideration of HK$5,200,000. The purchase was completed on 31 March 2009 with the assistance of a mortgage. On 25 March 2011, the Husband signed a tenancy agreement as tenant with the 2nd Respondent as the landlord of Flat E for a monthly rental of HK$25,000 for the period 1 April 2011 to 31 March 2012. The alleged tenancy was renewed for further periods of 2 years at a monthly rental of HK$25,000. These tenancy agreements were not stamped and there appears to be no dispute now that the Husband was in fact living here with the 2nd Respondent;
(6) Between April 2011 to March 2013, the Husband made regular payments to the 2nd Respondent (ranging from HK$50,000 to HK$200,000 each month) through bank transfers. Such payments totaled HK$2,310,000;
(7) On 5 January 2012, a company called TF Co Ltd was incorporated. The Husband was the sole shareholder and director of this company;
(8) In about July 2012, the Husband ceased to return to the former matrimonial home. On 10 September 2012, the car park at the former matrimonial home was sold for HK$888,000. The former matrimonial home was sold to the Husband’s mother and sister for a consideration of HK$6.3 million. The Wife says that this was sold at an under-value and that the market price at the time was HK$7 million;
(9) The Husband and Wife signed a “Divorce Agreement” in about June or July 2012 in full and final settlement of the Wife’s claims for ancillary relief. The Husband is relying on this agreement. On the other hand, the Wife says that the Court should not enforce this agreement as it was entered into without proper legal advice and full and frank disclosure;
(10) Between 17 August 2012 and 3 October 2012, the Wife received sale proceeds of family properties amounting to about HK$12.8 million.
(11) On 13 September 2012, the Wife signed a preliminary sale and purchase agreement in relation to her present residence (Flat B) together with 2 car parks for a consideration of HK$12,500,000. The purchase was completed on 2nd January 2013;
(12) Up to 7 February 2013, the Husband made a payment of HK$150,000 per month to the Wife for her maintenance. The monthly payments ceased for a period of 18 months, up to October 2014 and the Wife has had to rely on her own savings.
(13) The Wife informed the Husband of her decision to divorce in early April 2013. The Petition was issued on 10 April 2013. The Wife’s solicitors spoke to the Husband over the telephone to arrange for service on 18 April 2013. However, the Husband failed to turn up on the appointed date. The Wife’s solicitors then attempted personal service on 19 April 2013 but to no avail. In the mean time and on 22 April 2013, the Husband allotted 9,999 shares in TF Co Ltd to the 2nd Respondent. The Petition was eventually served on the Husband’s solicitors on 23 April 2013 after they indicated that they had authority to accept service. On 26 April 2013, the Husband resigned as director of TF Co Ltd and the 2nd Respondent was appointed in his stead;
(14) In the same month, the Husband transferred HK$2,880,310 from his HSBC account to the 2nd Respondent. In May 2013, he transferred US$412,252.43 and AUD $290,349.24 to the 2nd Respondent. After he filed his Answer and Cross Petition and on 21 May 2013, he paid HK$525,000 to the 2nd Respondent;
18. On 10 June 2013, the Wife’s solicitors wrote to the Husband’s solicitors to arrange for the exchange their Forms E. On 17 June 2013, the Husband’s solicitors sought a time extension. The exchange of Forms E eventually took place on 18 June 2013. On 20 June 2013, the Wife’s solicitors wrote to the Husband’s solicitors complaining of non-disclosure. The Husband was subsequently ordered to provide the missing information on 24 June 2013.
19. In a letter dated 2 July 2013, the Husband’s solicitors alleged that he was trading in his own name as a consultant for the period from 1 December 2008 to 31 March 2012 and that his monthly income was HK$516,000. He admitted that he was the holder of the only issued share in TL Co Ltd but alleged that he was holding half of the interest in that share for the 2nd Respondent. He started working as the manager of TL Co Ltd since 1 April 2012 with a monthly income of HK$100,000. Copies of bank statements were provided to the Wife’s solicitors under cover of a letter dated 8 July 2013.
20. On 9 August 2013, the Wife’s solicitors raised queries as to the whereabouts and destinations of the HK$2,880,310, US$ 412,252.43 and AUD$290,349.24. By a letter dated 14 August 2013, the Husband’s solicitors confirmed that those sums were transferred to the 2nd Respondent. They further alleged that TF Co Ltd had always been used for trading and alleged that the company had nothing to do with the Husband’s medical practice. They also alleged that the business was conducted mainly by the 2nd Respondent and that the Husband was only assisting her. The Husband alleged that the proceedings had caused him great distress and he had therefore resigned as director of TF Co Ltd and transferred the share to his “business partner”, the 2nd Respondent.
21. After a round of questionnaires, the Wife issued an application under section 17 of the MPPO on 26 August 2013. Although the Wife’s s.17 application was disputed by both the Husband and the 2nd Respondent, HK$2,880,310 was returned to the Husband on 29 October 2013. On 27 November 2013, the 2nd Respondent re-assigned the allotted 9,999 shares in TF Co Ltd to the Husband but she remained as a director. On 22 April 2014, the 2nd Respondent transferred HK$3,727,056 to TF Co Ltd.
22. The 2nd Respondent was joined to these proceedings on 8 November 2013 for the purposes of the s.17 application. On 22 April 2014 (i.e a year after the commencement of these proceedings), the Husband finally admitted his relationship with the 2nd Respondent. He further admitted that he had paid for the down payment and mortgage instalments of Flat 49A and 52G. He stated that 52G was intended to be his permanent home with the 2nd Respondent. He further alleged that the 2nd Respondent had contributed towards the bulk of the down payment for Flat E out of her savings but he admitted that he had paid for the mortgage instalments and acted as guarantor.
23. The shares in TF Co Ltd and the above mentioned properties currently under the 2nd Respondent’s name are now the subject matter of a preliminary issue trial.
24. On 30 June 2014, the Wife’s solicitors wrote to the Husband’s solicitors, requesting for maintenance pending suit of HK$175,000 per month. This was refused by the Husband. The Wife then issued a summons for maintenance pending suit on 7 October 2014. On 11 February 2015, the parties filed a consent summons in respect of maintenance pending suit at HK$125,000 per month.
25. This was followed by an application by the Husband under s.17 of the MPPO in respect of money paid by the Wife to her mentor and former colleague. This application was eventually withdrawn with costs to the Wife.
26. In 2015 and as explained below, the Wife was diagnosed with endometrial cancer. The proceedings came to a stand-still to allow the Wife to receive treatment. Fortunately, the Wife is now in remission.
27. By a summons dated 20 December 2017, the Wife asked for an upward adjustment of the maintenance pending suit from HK$125,000 to HK$230,000 per month and for legal costs contribution in the sum of HK$3.6 million or alternatively a monthly sum of HK$300,000 for 12 months for the period leading up to the FDR.
Income and Resources
28. There is no dispute that the Husband is a medical practitioner with a very high earning capacity. It was also agreed that he has the ability to pay the sums requested by the Wife as maintenance pending suit.
29. In to his latest Form E, the Husband alleged that he has a monthly income of HK$180,000 per month [B1/71]. However, he has also admitted during discovery that his average monthly income between 1 April 2011 and 31 Match 2012 was HK$516,500 per month (i.e. An annual income of HK$6,198,000). Although he alleged that he was working for TF Co Ltd since 1 April 2012 with a monthly income of HK$100,000, he also admitted that he still carried on his practice as a medical doctor with a gross medical service income of HK$300,000 generated by him for TF Co Ltd. Through discovery, it was found that TF Co Ltd had a turnover of HK$9,003,132.07 from the Husband’s medical consultancy service income for the period from 5 January 2012 to 31 March 2013 (i.e. HK$692,000 per month). According to the audited accounts of TF Co Ltd, it had a medical service income of HK$8,386,606 for the year ended 31 March 2016 and HK$8,606,540 for the year ended March 2015 (i.e. An average of HK$708,047.75 per month). There was also a dividend payment of HK$2 million in each of 2015 and 2016 and the payment of directors’ emoluments (ostensibly to the 2nd Respondent) in the sums of HK$1,680,000 and HK$2,397,500 for 2016 and 2015 respectively.
30. Although ownership is in dispute, there is no dispute that the Husband is living with the 2nd Respondent. There is also no dispute that 4 out of the 5 properties under the 2nd Respondent’s name are currently yielding a total monthly income of at least HK$25,500.
31. According to the Husband’s Form E, her has bank savings of just over HK$1.9 million and socks worth close to HK$250,000. According to the audited accounts of TF Co Ltd for 2016, the cash in bank and at hand amounts to over HK$7 million.
32. In contrast, the Wife says that she has been suffering from a debilitating disease called Myalgic Encephalomyelitis or more commonly known as Chronic Fatigue Syndrome (CFS) since 2008. In June 2009, she resigned from the University, and has since only done some part time research work. Apart from publishing an article in 2013 (which the Wife says was written prior to her resignation) and some co-authored publications, she has had little (if any) income. In March 2013, the Husband ceased to make any maintenance payments to the Wife. For a period of about 18 months, the Wife has had to rely on her savings for her not only her living expenses but also the costs of these proceedings. In 2015, the Wife was diagnosed with endometrial cancer and she has had to pay for her treatment with the maintenance she was receiving. She is unemployed and has no income, although her earning capacity is in dispute. The Husband suggested that the Wife should work as an English tutor earning $300 to $400 per hour to maintain her own living. He also suggested that the Wife should rent out a car park for HK$1,800 to supplement her living expenses.
33. The Wife’s bank savings only amount to HK$100,000. She already has HK$1.8 million outstanding legal fees and is due to receive an updated bill of costs from her solicitors. She is also faced with the costs of the upcoming trial of the preliminary issue.
The Wife’s medical condition
34. According to the Wife, she was diagnosed with CFS in 2008. She says that this is a chronic medical condition with complex, multi-varied and fluctuating symptomatic nature which requires a wide range and cocktail of different management and treatment strategies, for example, physical modality interventions, dietary control and measures, rest and relaxation and health supplements. As a result of the symptoms, she has reduced energy, functioning capacity and slowed down body function. Hence, a disproportionately large amount of time is required for her to prepare for or complete a task. She also finds multi-tasking very difficult. Factors such as stress, rushing, over-exertion, poor sleep, heightened emotions or prolonged strain, exacerbates the symptoms and can cause her overall body functioning to “shut down” and force termination of all activity engagement completely, i.e. She will become bed-ridden.
35. She says that she has been trying her best to cope with this condition, especially within the constraints of Hong Kong where the condition is poorly understood and acknowledged by the medical system and practitioners. The protracted litigation, the demands of a house move and renovation, the need to care for her elderly mother in Australia and the lack of financial security has added to her stress levels.
36. The Husband accepts that there is a disease called CFS but denies that the Wife is suffering from it. He says that the Wife should see a psychologist instead.
37. In October 2015, the Wife was diagnosed with endometrial cancer and had to undergo immediate surgery involving complete removal of her entire reproductive organs (radical hysterectomy), removal of all lymph nodes in her pelvis and partial stripping of the wall lining of her cervix. Although the surgery was successful, she has been suffering from carious health complications. These included impaired circulation and pain in her lower body and legs, lymphedema, a range of surgically-forced menopause symptoms (e.g. greater fatigue, severe hot flushes and night sweats, mood changes, deteriorating changes to the skin and soft tissue structures, breast swelling and aching and continuing and recurrent unresolved gynecological problems.
38. The Wife alleges that her pre-existing CFS has worsened as a result of the post-surgery complications. It was also aggravated by the stresses and anxiety brought about by the proceedings and the uncertain outcome of her financial circumstance. She has deep seated fatigue, dominating muscular/soft tissue pain and tightness, sluggish circulation and swollen and tender lymph glands, fogging of the brain, extreme cognitive fatigue and affected cognitive functions with blurring vision, gastrointestinal problems, labored breathing, chest pain and heart palpitation, dietary intolerances to certain food and physical intolerances to extreme climate or environmental conditions.
39. In September 2016, a CT scan revealed that there was a 20mm well defined low density, non-enhancing lesion at the left superior aspect of the vagina, for which gynecological review was recommended.
40. In addition, the Wife says that she had other pre-existing or degenerative health issues such as problematic feet structure (bunion deformities and flat arches in both feet), with associated pain, gait issues with resulting incidence of falling, increasing lower back pain from degenerations found in her lower spine, as well as dental issues (teeth mal-alignment and impaired biting function, reduced jaw bone density and problematic tooth structure. She also required regular clinical monitoring of other pre-existing health issues such as the retinal degeneration in both eyes which was detected in 2004.
41. According to the Wife, because of the worsened CFS and other additional health issues, she has progressively sustained substantial weight gain of at least 10 kg since 2013. Apart from the CFS and the extent of the lymphedema, the Husband does not appear to dispute most of the symptoms resulting from the surgery.
Applicable Legal Principles
42. This application is made under section 11 of the MPPO,
43. The principles on variation are set out by Cheung JA in AEM v VFM [2008] 3 HKLRD 36 at §14 as follows:
Principles on variation
14.
1. “The power to vary a periodical payment order is expressly provided for by s.11(1) of the Matrimonial Proceedings and Property Ordinance (Cap.192) (the MPPO)
(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section, the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.
2. How this power is to be exercised is stated in s.11(7)
(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of6he matters to which the court was required to have regard when making the order to which the application relates and, where the party against whom that order was made has died, the changed circumstances resulting from his or her death.
3. The traditional approach to variation was not to re-fix afresh the amount of maintenance but to consider the amount of change in the actual means of the parties so that the new order should merely be increased or decreased roughly in proportion to the change in the means: Foster v Foster [1964] 3 All ER 541, Jackson’s Matrimonial Finance and Taxation (7th ed., 2002) ch.3, p.131.
4. The modern approach, as required by s.11(7), is for the court to consider all the circumstances of the cases The court is not required to proceed from the starting point of the original order but look at the matter afresh: Flavell v Flavell [1997] 1 FLR 353 at p.357B following Lewis v Lewis [1977] 1 WLR 409 and Garner v Garner [1992] 1 FLR 573.
5. Any change in any of the matters to which the court was required to consider when making the original order was one of the circumstances to be considered.
6. Almost invariably, an application to vary a earlier periodical payment order will be brought on the basis that there has been some changes in the circumstances since the original order was made, for example, continuing inflation; the increased costs in supporting a growing child and that one party may be more adversely affected than another by the increase in the costs of living: Garner v Garner.
7. An increase in the wealth of the husband was a relevant factor to be taken into account: primavera v Primavera [1991] 1 FLR 16 and Cornick v Cornick (No 2) [1995] 2 FLR 490.
8. At the same time the basis and intended effect of the original order are relevant factors to which the court on variation should pay regard and there should not be a radical departure from the approach taken by the parties themselves when they had entered into an agreement embodied in a consent order: Boylan v Boylan [1988] 1 FLR 282.”
44. The jurisdiction to vary is untrammeled, but normally the Court would take into account if there has been any material change in the circumstances since the earlier order: HCTT v TYYC [2008] 5 HKC 86 per Tang VP at §§14-16. His Lordship referred to the following passage of Cazelet J in Garner v Garner [1992] 1 FLR 573 at §15 which stated as follows:
“…the court should have as unfettered a discretion as possible to deal with the situation as it is when the matter comes before it. I am sure it is not the intention of Parliament in any way to trammel the discretion by any kind of technical reasoning or technical grounds.
Almost invariably, an application to vary an earlier periodical payments order will be brought on the basis that there has been some change in the circumstances since the original order was made; otherwise, except in exceptional circumstances, the application will, in effect, be an appeal. If an order is not appealed against, or is made by consent, then the presumption must be that the order was correct when made. If it was correct when made, then there will usually be no justification for varying it unless there has been a material change in the circumstances. However, because of the impact of continuing inflation, because children grow older and cost more to support and because, for example, the cost of living in its increase may hit one party harder than another, it will usually follow that, if time has passed, there will inevitably have been changes in the circumstances, of the parties concerned…
Following Lewis v Lewis, by which decision this court is bound, a court on the hearing of an application to vary is fully entitled to look at all the relevant matters set out in s.25 of the Matrimonial Causes Act 1973. On occasions, the court may be slow to accede to an application to vary a consent order; not least because the parties’ solicitors might otherwise be deterred from either seeking to negotiate such a provision or to achieve finality. Another factor which may influence a court will be the time that has passed since the original order was made…Shortly stated, the court must decide what weight it should attach to the original order and all the surrounding circumstances. However, once an application to vary is before it, the court is fully entitled to make an order considering all the circumstances afresh, paying such regard to the older order as may be appropriate.”
45. In the same case, Tang VP pointed out that the above mentioned principles are to guard against unmeritorious applications for variations who have second thoughts about settlements. This was reinforced by Lam J (as he then was) at §49:
“Even though we are only dealing with a consent order, I also agree with the observations of the Vice President…on applications for variation generally. Application for variation should not be pursued when in substance the grounds advanced for variation tantamount to re-argument of the same issues that have been argued before the court before making the original order. If a party is aggrieved by the terms of the original order, the proper course is to appeal against that order.”
46. As for any application for maintenance pending suit, “the Court has to balance the reasonable needs of the applicant against the respondent’s ability to pay for them”: HJFG v KCY [2012] 1 HKLRD 95 at §31 per Yuen JA.
47. As to the function of maintenance pending suit, “[a]n award for maintenance pending suit is by its very nature a measure designed to hold the ring and to ensure that the claimant can live reasonably pending the final determination of her claims. A legal services payment order is designed to ensure access to justice and that the parties can litigate on an equal footing. Both types of award are always adjustable if it transpires at the final hearing that there has been too much or for that matter too little paid”: per Mostyn J in MET v HAT (interim Maintenance) [2015] 1 FLR 576 at §10.
48. Whilst the Court will take a broad brush approach, regard must be had to the matters outlined in Jackson’s Matrimonial Finance and Taxation, 8th ed., at §2.5:
“When the case is presented, there is sometimes a tendency or need to take a ‘rough guess’ approach to the period pending suit, on the basis that a more thorough investigation will be made at a later stage, as when the long term post-suit situation is investigated. This is all very well when the potential payee and family are receiving sufficient for their reasonable needs at this time, but all too frequently they are not, and it must be borne in mind that this pending suit period, even where the suit is not defended, the usual situation, must average some months from date of presentation of petition to date of decree absolute in cases of divorce, judicial separation and nullity, or final order in the case of civil partnership. It is emphasized that this period may be less in some cases and longer in others.”
The Wife’s Claim
49. The Wife’s claim is for an upward variation of maintenance pending suit from HK$125,000 per month to HK$230,000 per month. In addition, she is asking for legal costs contribution in the form of a lump sum of HK$3.6 million or HK$300,000 per month for 12 months.
50. The breakdown of the Wife’s claimed living expenses are as follows:-
| Utilities | $ 6,200 |
| Management Fees | $ 4,178 |
| Food | $ 12,000 |
| Household expenses | $ 8,700 |
| Car expenses | $ 4,500 |
| Insurance premia | $ 20,000 |
| Part time helper | $ 5,000 |
| Meals out of home | $ 5,500 |
| Transport | $ 4,000 |
| Clothing | $ 15,000 |
| Personal grooming | $ 5,000 |
| Entertainment | $ 5,000 |
| Holiday and travel | $ 36,000 |
| Medical and dental | $ 85,000 |
| Contribution to parents | $ 16,000 |
| Others | $ 1,500 |
| Total | $ 234,578 |
Whether there are any changes of circumstances
51. The Husband appears to accept that there have been material changes of circumstances for the Wife. He accepted that the Wife was diagnosed with endometrial cancer and had to undergo immediate surgery which was successful. He noted the Wife’s assertion of impaired circulation and pain in the lower body, the forced menopausal symptoms, the other gynecological problems and the alleged worsened CFS. It was not in dispute that at least the cancer and recovery from her surgery was something new which was likely to have increased her medical expenses. However, he argued that it was not to the extent of HK$105,000 per month. He also pointed out that the Wife had allegedly been suffering from the CFS condition since 2006. He submitted that the purported deterioration of this condition was only a guise to drum up further expenses at beauty parlors. He further argued that many of the purported changes simply do not justify the significant increase in many of the heads of claim and that the Wife is simply rehashing her previous arguments.
52. It is clear that the Husband accepts that there are changes of circumstances which would increase the Wife’s expenses. Apart from her illnesses and effect of surgery, it cannot be disputed that the cost of living has risen since 2015. Further, it is unlikely that the Wife would have expected the proceedings to be so protracted and costly. The only dispute is quantum.
Standard of Living During the Marriage
53. There can be little, if any dispute that reasonable needs are measured against the standard of living enjoyed by the parties during the marriage.
54. The Husband gave a history of their standard of living from 1987 onwards. The Court will not, and is not required to conduct a forensic examination of the monthly expenses from the start of their marriage. Further, at that time, both parties were working and had their own resources. Whatever the reason was for the Wife’s resignation, she has been financially dependent on the Husband since 2008. There is no dispute that between 2009 and 2012, the Wife’s expenses (exclusive of housing) amounted to HK$95,000. From 2012 and until February 2013, the Husband paid her HK$150,000 per month as living expenses. It is clear from the above, that the standard of living during the marriage was in fact fairly high.
Disputed Heads of Claim
55. Some of the heads of claim are not in dispute. In her claim, the Wife is asking for HK$16,000 as contribution to her parents. This was originally opposed. The Husband said that the Wife should not be supporting her parents in these difficult times. The Wife has always contributed towards her parents, who had given the Husband and his family tremendous help during the early years. Despite the fact that the Husband alleges that these are “difficult times”, he has chosen to support the 2nd Respondent’s parents. When this was pointed out to the Husband, he conceded that this sum should be included in the maintenance pending suit. The undisputed heads of claim include:
| Management fees | HK$ 4,178 |
| Household food | HK$ 12,000 |
| Car Expenses | HK$ 4,500 |
| Insurance premia | HK$ 20,000 |
| Domestic Helper | HK$ 5,000 |
| Meals out of home | HK$ 5,500 |
| Transportation | HK$ 4,000 |
| Personal grooming | HK$ 5,000 |
| Entertainment | HK$ 5,000 |
| Others | HK$ 1,500 |
| Contribution to parents | HK$ 16,000 |
| Total | HK$ 82,678 |
56. The major items of expense in dispute are the increased medical expenses, increased holiday expenses, deferred expenses, utilities, household expenses and clothing and shoes.
Medical Expenses
57. The bulk of the Husband’s criticisms under this category are targeted at the Wife’s expenses at Beauty House. The question as to whether the Wife has been suffering from CFS has been an ongoing issue in these proceedings. The Husband pointed out that the Wife has allegedly been applying self-help measures to cope with her symptoms since 2008. These include regular care in a local beauty parlor mainly for the purpose of improving lympatic and overall circulatory flow. The treatment allegedly involved low dosages of ultra sound and laser, as well as whole body massages and facial and neck treatment with various serums by beauty therapists. According to the Wife, her CFS condition has now worsened and the cost of treatments have hence increased. The Husband does not accept that the Wife’s CFS condition as deteriorated. He argued that if these treatments are working, the Wife’s condition would not have deteriorated. The fact that her condition has so deteriorated is testament to the futility of the treatments. He also argued that the nature of the treatments at the beauty parlor are unclear and that the Wife has in fact failed to undertake the treatments suggested by her own expert, Dr. Bateman, which includes complimentary and alternative medicine providers, garment, micro-current massage therapy, gentle yoga, interventions that improve circulation, weight, dietary health, psychological well being and self-help capabilities. Instead, the Wife has been receiving Body treatment, Eye treatment, Facial treatment, 3D treatment, Tri-body treatment. She has also spent vast sums of money on eye creams, SR serums, Collagen Serum, Perfect Body.
58. The Husband does not accept that the Wife is suffering from CFS. Instead according to his expert, Dr. Calais Chan, the Wife is suffering from a psychological condition. The Husband wants the Wife to try a course of psychological treatments. He has however, not suggested how much the suggested treatments would cost.
59. As for the effect of cancer, the Husband pointed out that the Wife has recovered well from surgery apart from suffering from lymphedema in the lower limbs. However, according to Dr. Chung:
“physically, if there is no recurrence of the cancer, her capacity to work should not be seriously impaired. Her lymphedema may have a detrimental effect but according to the documentation provided, this appears to be relatively minor and seems to have resolved in the latest consultation with Dr. Wong, her treating gynae-oncologist…Most patients recover well from the surgery and are able to resume normal daily activities. From the documentation provided, her recovery appears to have been reasonable in terms of the cancer. Apart from the past lymphedema, there is no mention of other physical disability as a result of the cancer.”
60. The Husband therefore argued that the Wife has healed relatively well, although he does not reject the possibility that due to her recovery from cancer and surgery, she may require some additional medical treatment, diagnoses etc. He suggested that a more reasonable sum (inclusive of the treatments at the beauty parlor to be around HK$25,000 per month.
61. On the Wife’s part, she has produced an Accountant’s report to illustrate her spending over the past three years, i.e. from 2015 to 2017. According to this report, the Wife has actually spent an average of HK$181,124 per month. This does not include the HK$16,000 contribution to her parents, various expenses that the Wife has had to defer. Her expenses in 2016 were lower due to the worsening of her post-cancer surgery complications and additional health issues including lymphedema and a 2 cm vagina cyst which caused her to be mainly home bound.
62. The Wife argued that her chosen treatments at the beauty parlor were endorsed by Dr. Bateman:
“[The Wife’s] self-care methods of resting, pacing, positive thinking, mindfulness, setting realistic priorities, avoiding physically strenuous activity, and dietary changes are all appropriate and recommended techniques for ME/CFS. A treatment for ‘improving lymphatic and overall circulatory flow’ would be helpful for management of the vascular/circulatory changes that underlie orthostatic intolerance. Low does ultrasound, whole body massage and other supportive treatment delivered by therapists can be and certainly are used by patients with ME/CFS seeking relief from achiness, muscle tension, fluid retention, generalized unwellness…
I have reviewed the additional therapeutic and management interventions that [the Wife] has adopted since August 2016 and find them usual and appropriate for her known conditions. This includes:
A) Orthopedic foot problem: It is medically routine, relevant and appropriate to seek consultation with a podiatrist, wear orthotics and engage in physical therapy or guided exercise for degenerative or bony foot problems.
B) Endometrial cancer, surgery, and post surgical complications, including post-menopausal hormone deficiency symptoms. Typical chronic problems in this setting include lymphedema, hormone skin changes, hot flashes and night sweats, breast discomfort and pain or discomfort in the post-surgical anatomic areas, including the pelvis, low back and legs. It is medically routine, relevant and appropriate to utilize compression clothing, limb elevation, structured exercises, massage or any other modalities that improve circulation, skin treatments and help with post-menopausal weight gain. Equaqlly appropriate interventions include treatment of pelvic, leg or low back pain with micro-current, ratio-frequency, ultrasound and similar procedures.”
“ME/CFS. It is medically routine, relevant and appropriate to engage in supportive care for the many manifestations of this multi-system illness, this includes ‘activity pacing and rest, gentle physical conditioning, interventions that relax the mind and body; improve restorative sleep, reduce pain and improve circulation’…my opinion is that [the Wife] is engaging in medically appropriate and relevant self-help and symptom-relieving interventions that fit a typical supportive care regimen for ME/CFS. This includes, but is not limited to, treatment through complimentary and alternative medicine providers, garments, gentle yoga, interventions that improve circulation weight, dietary health, psychological well being and self-help capabilities. These modalities represent ongoing support for chronic symptoms and functional limitations.
63. According to the Wife’s expert, Dr. Bateman, CFS is a multisystem illness that is by definition, debilitating, subject to relapse from activity or stress (physical, orthostatic, cognitive, emotional etc) and marked by cognitive impairment, sleep disturbances, orthostatic intolerance, widespread pain and altered immune function. This illness is supported by extensive documentation [B2/460]. The existence of this illness is not in dispute. According to the Husband’s expert, Dr. Chan, CFS is a fairly new diagnostic label, although the illness was clearly described more than a hundred years ago [B2/537]. Dr. Chan also agreed that CFS is a debilitating illness, which can lead to severe impairment of function in every aspect of the patients’ lives, including physical, psychological, cognitive, social and occupational. The only dispute is whether the Wife is suffering from CFS.
64. It is the Husband’s case that the Wife is NOT suffering from CFS but is using it as a guise to exaggerate her expenditure. Dr. Chan’s report has been severely criticized by Dr. Bateman as being “biased”, “weakly supported”, “exhibits disregard for the medical record, little awareness of the scientific literature regarding ME/CFS, and bias in the way the psychological tests were administered and interpreted”. She pointed out that Dr. Chan chose to use the MCMI III psychometric assessment, instead of the more up-to-date MCMI IV assessment. Dr. Bateman also challenged Dr. Chan’s use and interpretation of assessments. In particular, she pointed out that the alleged primary treatments guidelines for CFS mentioned by Dr. Chan has been discredited in the scientific community.
65. The Court is not in a position to rule on the dispute between the two experts at this stage. However, whatever the dispute is, the Husband’s case does not even appear to be supported by his own expert. Dr. Chan stated at paragraphs 115-116 of his report:
“Given [the Wife’s] significant adjustment and emotional difficulties, I have grave concern about the exclusive focus over the diagnosis of CFS in her previous medical examinations, as many of [the Wife’s] presenting CFS symptoms (e.g. physical and mental fatigue, unrefreshing sleep, cognitive impairments) could be primarily accountable by her various emotional and adjustment difficulties. In fact, [the Wife’s] emotional and adjustment difficulties have also been identified by Dr. Oldmeadow and Dr. Bateman in their respective assessment, but have not been addressed with sufficient attention from a psychological point of view, primarily due to basic differences in professional expertise.
In clinical practice, and especially in the metal health field, CFS is basically a diagnosis of exclusion as mentioned above. It is important t note here that the diagnosis of CFS should only be made I the absence of other alterative medical or psychiatric/psychological illnesses. In my opinion, [the Wife] has been suffering from significant adjustment and emotional problems that are clearly in line with the diagnosis of Adjustment Disorder with Mixed Disturbance in Emotions and Conduct as defined by the DSM-5 manual within the category of Trauma and Stress Related Disorders…Accordingly, the diagnosis of CFS should be more appropriately seen as a viable differential diagnosis or co-morbid symptoms of Adjustment Disorder”.
66. It appears that Dr. Chan has not ruled out the possibility that the Wife is suffering from CFS. He only challenges the extent of her symptoms and disabilities. I am further reinforced in my view by paragraph 120 of Dr. Chan’s report where he appears to be making recommendations for treatment of the Wife’s CFS (which according to Dr. Bateman, have been discredited in the scientific community):
“In respect of treatment, it is obvious that formal psychiatric and/or psychological treatments are strongly indicated to manage [the Wife’s] alleged longstanding adjustment difficulties and/or CFS symptoms. In fact, well established psychological treatments are available for dealing with various adjustment and emotional problems, either in themselves or as co-morbid conditions of CFS. For instance, formal treatment procedures involving cognitive behavior therapy (CBT) and Graded Exercise Therapy (GET) delivered by experienced specialists have been found to be clinically effective in ameliorating symptoms and improving functions in CFS patients, as recommended by the NICE guidelines”.
67. There is a dispute as to the appropriate treatment for the Wife’s CFS. Dr. Bateman is of the view that the Wife’s self-help measures are appropriate and relevant, which is challenged by the Husband. He says that the self-help treatments currently used by the Wife are clearly not working and that she should try psychological treatment instead. However, this again, does not appear to be supported by his own expert. Dr. Chan stated at paragraphs 121-122 of his report:
“It is obvious from a psychological point of view that [the Wife’s] current treatment regime in form of self-management and complimentary therapies is unsatisfactory and grossly below the optimal standard of care for her Adjustment Disorder. A structured course of formal psychological treatment by well-trained professional therapists, aimed at dealing with [the Wife’s specific adjustment and emotional problems, is clearly indicated. CBT and GET could also be added to deal with [the Wife’s] various chronic fatigue symptoms. Effective pharmacological treatment is also available to address many of the adjustment, emotional and somatic symptoms when needed.
In fact, I am not aware of any formal evidence supporting the various alternative or complimentary treatments that [the Wife] has been receiving on frequent basis in Hong Kong. Although the costly treatments might help promoting a personal sense of wellness, they would not be particularly useful in dealing with [the Wife’s] various adjustment difficulties, emotional and chronic fatigue symptoms in the long run.
68. Putting aside Dr. Bateman’s criticism that the treatments suggested by Dr. Chan have been medically discredited, Dr. Chan was only dealing with the Wife’s treatment from a psychological stand point. There appears no dispute that CFS is aggravated by stress. In the last few years, the Wife was not only faced with the effects of her alleged CFS condition, she had to deal with the breakdown of her marriage, the protracted proceedings, cancer treatment and its after effects. There appears to be also no dispute that CFS is a chronic condition and a patient can only manage or reduce the rate of deterioration. In respect of the physical symptoms, Dr. Chan admitted that the various alternative or complimentary treatments that she has been receiving do promote a personal sense of wellness.
69. The Wife instructed an accountant to calculate her average expenses between 2015 and 2017. This demonstrated that she has in fact incurred the expenses for alternative treatments at the beauty parlour. However, the fact that the Wife has incurred those expenses does not necessarily mean that they are reasonable. The treatments at this beauty parlour are not aimed solely at her alleged CFS condition. She has been patronizing this beauty parlour for beauty treatments long before her alleged illness. According to the records produced by the Wife, she was already spending over HK$100,000 per month at this beauty parlour in 2008. In addition to the alleged symptoms of CFS, the Wife also has to deal with the various post-surgery complications.
70. In addition to the above, the Wife has deferred some medical and dental treatments, including urgent treatment for her teeth, podiatric treatment and measures for her feet and regular clinical monitoring of the retinal degeneration in both of her eyes.
71. In the light of the numerous medical problems faced by the Wife, her request for HK$86,000 per month as medical and dental treatment is reasonable.
Travelling Expenses
72. The Wife’s claim is for HK$36,000 per month as travelling expenses. The bulk of this travel budget is for making trips to visit her mother in Australia. She sometimes stops over in Melbourne to attend consultations with her treating doctor for CFS. The remainder of the budget is to enable her to travel for leisure. The Husband says that this is unreasonable and offers HK$18,000 per month.
73. There is a dispute as to whether the couple travelled by business class during the marriage. The Husband relied on the receipts produced by the Wife and says that the evidence clearly shows that they had always travelled in economy class. The destination and class of travel was in fact unclear from the receipts [B2/417; 421.59-421.60]. However, the Wife was able to produce some boarding passes from 2012 to indicate that she did travel at least for part of the time in business class [B1/242-248].
74. The Wife explained that disregarding the dispute in respect of the travelling cost during the marriage, she now needs to travel more comfortably as a result for her physical condition, including lymphedema. The Husband argues that the Wife should not now be allowed to travel in business class as she has been coping with CFS since 2008. Firstly, there is evidence to show that she did sometimes (although not always) travelled in business class. Further, the Wife is not saying that she needs to travel in business class because of her alleged CFS. Instead, it is because she suffered from lymphedema. However, according to the report from Dr. Chung [B2/553], the lymphedema in the lower limbs have subsided in 2017.
75. The Husband also criticized the Wife for stopping over in Melbourne, instead of flying direct to Brisbane to visit her mother. This ignored the fact that her treating doctor for CFS is in Melbourne. However, there are only 365 days in a year. If the Wife plans on more travelling, she would be spending less time at the beauty parlour. Some of the budget for alternative treatment could be used for additional travelling. In my judgment, a sum of HK$25,000 per month would be reasonable.
Clothing and Shoes
76. There appears to be no dispute that the Wife has put on very substantial weight, especially after her surgery. The Wife is asking for HK$15,000 per month to enable her to purchase a new wardrobe. The Husband says that although the Wife’s clothes will be tight, they are still wearable.
77. The Wife has put on at least 10 kg since 2013. The Husband’s stance is wholly unreasonable. These proceedings have already gone on for 5 years and is unlikely to be concluded within the next 3 years (with the trial if the preliminary issue still pending). With that amount of weight gain, it is ridiculous to suggest that the Wife should be expected to squeeze into her old clothing for the next few years.
78. The Wife says that she was accustomed to wearing designer clothing during the marriage. The Husband admits that she had some designer clothing but they would only purchase off season items at outlets. The budget sought by the Wife would in no way enable her to purchase a wardrobe from top end designers, even at an outlet. It would only be sufficient to purchase from lower end designers. In the Court’s view, even according to the Husband’s case, this is commensurate with the previous standard of living.
Household Expenses
79. The Wife’s claim is for HK$8,700 under this head. Apart from the usual household items, she says that there are substandard structural issues from the previous renovation. As a result, there are constant breakdowns and her bedroom is uninhabitable. She will therefore have to effect repairs. Some electrical items would also have to be replaced.
80. Firstly, the defects found in the Wife’s flat are supported by a survey report. The more serious defects include de-bonding of plaster over various areas in the flat, the moiety of the ceiling is curved, there are water stains and water leakage in both the living and master bedroom, uneven flooring and defective water drainage in bathrooms and the lack of fire resistance walls in the kitchen.
81. The Husband asserts that these repairs or renovation have never been reasonable or necessary because they are not immediate needs. He pointed out that the Wife spent HK$2.1 million on renovation and furnishing her flat in 2014. There is therefore no reason for her to renovate her flat again. In any event, he says that since these renovations have been deferred, they can be further deferred until the end of these proceedings.
82. Maintenance pending suit is based on reasonable needs “generously interpreted”. The Wife cannot be expected to live in the current conditions of her flat. Even if she does not renovate her flat, she would have to effect some repairs. Further, the Husband himself (without the need for renovations or repairs) is spending HK$8,000 as household expenses. In all those circumstances, the Wife’s claim is wholly reasonable.
Utilities
83. The Wife is asking for HK$6,200 per month as utility expenses. The Husband says that this is highly exaggerated as she lives alone. He is offering HK$3,000 per month.
84. The Court understands that the Wife may be spending a lot more time at home than the Husband and the 2nd Respondent. However, her alleged utility expenses do appear to be rather high. In my view, the Husband’s offer is reasonable.
Domestic Helper
85. The Wife is asking for HK$5,000 for a part time local domestic helper. The Husband says this not reasonable as they never had a helper during the marriage. Despite that, the Husband himself also has a part time helper which costs HK$4,000 per month. It is difficult to see why it is reasonable for him to have a helper but not for the Wife.
Other Items
86. The other items of expenditure in the Wife’s Form E do not appear to be in dispute.
Conclusion
87. In HJFG v KCY [2012] 1 HKLRD 95, Hartmann JA (as he then was), at paragraphs 37 and 38 of the judgment, gave a succinct summary of the law in the area of maintenance pending suit:
“37. The principles that have been 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, I 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 criterion 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. This 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 assumption 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 as situation, the court should err in favour of the payee.
38. Finally, it is to be noted that in application for interim maintenance, when the amount to be paid is for a limited period only and not all 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”
88. The Wife’s reasonable needs are based on the standard of living during the marriage. Her needs should not be confined to the mere basics, but generously interpreted. The Wife in this case has based her reasonable needs on a high standard of living which she claims to have been provided by the Husband during the marriage. Although this is disputed by the Husband, his very high earning capacity is not in dispute. Whilst it remains to be seen whether this case would qualify as a “big money” case, it would be helpful to refer to the guidance given by Thorpe J (as he then was) in F v F (ancillary relief substantial assets) [1995] 2 FLR 45, on the exercise of the Court’s discretion in determining the Wife’s reasonable needs on an interim basis:
“I think that it is very important to recognize that in measuring affluence, extravagance and reasonable needs, there are no absolutes. All these concepts are comparative…Thus, in determining the wife’s reasonable needs on an interim basis it is important as a matter of principle that the court should endeavor 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. This 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 marriage and for the husband for considerably longer.”
89. The Husband was paying the Wife HK$150,000 up to 2013. Even without the various medical problems and the need to visit family in Australia, the monthly expenses of the Husband himself comes to about HK$180,000. This is in addition to a payment of up to HK$200,000 per month to the 2nd Respondent. In my judgment, a sum of HK$220,000 is reasonable as maintenance pending suit for the Wife.
Back Dating
90. The Wife is asking for the maintenance pending suit order to be back dated to the time of the last Order for maintenance pending suit in February 2015. She argued that the Court has unrestricted power to vary its own order retrospectively and to backdate any variation in a pre-existing order beyond the date of the application for variation. However, she admitted that orders are not usually backdated to a date prior to the notice of application to vary unless the justice of the case so requires. She submitted that that there are special circumstances in this case which justified backdating of the order, namely:
(1) There has been a lapse of 3.5 years since the last order was made. Some of the changes of circumstances, which led to the increase in the Wife’s needs happened relatively early on in this interim period, for example, she was diagnosed with endometrial cancer in October 2015;
(2) The Wife did not take out an application for variation of maintenance earlier as she was very ill;
(3) The Wife’s savings have been depleted;
(4) The Husband will not suffer any hardship if the Order were to be backdated.
91. On the other hand, the Husband argued that backdating the order to the last maintenance Pending suit order is highly unusual. The Wife has to show a change of circumstances in order to justify a variation. If the Court were to backdate the Order to the date of the last Order, it would negate the need for the change of circumstances. He submitted that the Order for variation should at most be backdated to the date of the application, i.e. December 2017.
92. In AEM v VFM [2008] 3 HKLRD 36, the parties divorced in 1991. The Court sanctioned a settlement whereby the Husband paid the Wife periodical monthly maintenance payments which were index-linked and automatically increased annually by the lower of the Retail Price Index (RPI) of the country in which the Wife resided or by the Husband’s increase in salary (the 1991 Order). In 1994, the Wife returned to the UK. In 1998, the Judge in Hong Kong ordered an annual increase in the payments, but this was not index-linked (the 1998 Order). In 2006, the Wife made a further application for variation.
93. Her application to vary the 1998 Order was granted by index-linking the payments and backdating this to 1999, adopting: (a) a 2.2 annual increase from the adjusted 1998 figure for the years 1999 to 2005, based on the average RPI increase between 1997 and 2004; and (b) a 5% annual increase from 2006, based on the Wife’s evidence on UK inflation (the 2006 Order). The Husband was now worth more than HK$110 million and although his monthly salary with a major listed company had not increased since 1998, his total recorded income had increased for 5 of the past 7 years. He appealed against the 2006 Order, arguing that the Judge erred in: (1) backdating it; and (2) adopting the 5% annual increased from 2006, submitting that the index-linked provision in the 1991 Order did not permit any further upward adjustment because his salary had not increased.
94. When the 2006 Order was made, the Wife was 56 years of age. She did not work had had to spend more time looking after the daughter. The Wife had since 2003 sold her property in Scotland and also her bed and breakfast business. This was due to the drop in the profit of the operation and the poor health of her father who had terminal illness. Her father died in 2004. Her mother has been unwell and required her constantly keeping up her company and spending more time with her. This would make it difficult for the Wife to maintain a regular job. The Wife had also disposed of her property in Farrer Top.
95. The Judge found that the Wife had a total capital of slightly over HK$565,000. It was the Wife’s intention to acquire a larger property to live in. The Judge found that Farer Top was never purchased or intended to be the final home for the Wife and children because it was purchased while she was still living in Hong Kong as one of the investments of her lump sum; it was always her intention that she should reside at the much bigger and more expensive Bury Farm should she return to live in the UK.
96. The appeal was dismissed by the Court of Appeal, which held that the exercise of the power under s11(1) of the Matrimonial Proceedings and Property Ordinance (Cap.192) to vary a periodical payment order required that all the circumstances of the case be considered, including any change in circumstances since the original order was made, such as continuing inflation, increased costs of raising a growing child, the greater adverse effect of increased costs of living on one of the parties and the Husband's increased wealth. The Court was not required to proceed from the starting point of the original order but could look at the matter afresh. The basis and intended effect of the original order were also relevant factors and the Court should not depart radically from the parties’ agreement embodied in a consent order. The Court had an almost unrestricted power to vary its own order retrospectively and to backdate any variation to a pre-existing order beyond the date of the application for variation. In practice, orders were not usually backdated to a date prior to the notice of application to vary, unless the justice of the case so required.
97. In that case, the Court found that the Wife had shown exceptional circumstances which justified backdating the order to 1999. There was sufficient evidence to show that rising costs of living eroded the value of the Wife’s payments. Further, the 2.2% annual increase was modest and gradual over the years. So the Judge could have made the adjustment by reference to the index-linked provision in the 1991 Order or without it. The Husband’s substantial wealth had grown since the divorce, and an upward adjustment would not cause him any hardship.
98. In S v S [1987] 2 All ER 312, Purchas LJ of the English Court of Appeal stated that:
“There may well be case, albeit exceptional ones, where in order to right a wrong order made in the past the backdating of the order over a period of years can be justified…Normally the countervailing effects of a shortfall in proper financial support in the past and the effect of the increase in the size of the order eventually made as a result in the fall in the value of the pound will be compensated in a rough and ready way over a comparatively short period of retroactive effect by the exercise of his general discretion by the judge in determining both the size of the order and the length of the backdating.
99. In that case, the backdating was drastically reduced on appeal. The Court of Appeal found:
“In the absence of specific reference in his judgment by the judge to the reasons for this exceptional period of retroaction, and in view of the information imparted to us by counsel for the wife at the outset of his submissions that he had drawn the judge’s attention to the parlous state of the wife’s finances, it seems at least a reasonable inference to draw that the judge was understandably attracted to a solution to this problem amongst other reasons to protect the one remaining minor child of the family. It is to be remembered that this substantial payment of periodical payments as a retrospective provision would not have been affected if the judge’s “invitation” to the husband to make the substantial payment of £400,000 had been accepted.
100. In Cornick v Cornick (No.2) [1995] 2 FLR 490, a backdating order was affirmed because of the fact that the Husband’s income had risen substantially during that period and the Wife had not in fact received what had been expected.
101. It is noteworthy that all the above cases relate to final orders for periodical payments, rather than maintenance pending suit. There is a vast difference between the two types of orders. The Husband’s counsel rightly pointed out that the purpose of an order for maintenance pending suit is to address the immediate needs of a party. The Wife’s lack of savings and her long term needs are matters that will be and should be fully considered at the ancillary relief trial. The existing order for maintenance pending suit was made by consent. There is no question of “an order to right a wrong order”. Further, some of the Wife’s expenses have been deferred (for example, dental treatment, podiatrist and increase travelling) and they have now been provided for. Those expenses were not incurred in 2015. Applications for maintenance pending suit are decided on a broad brush basis. Any under or over payment will be considered at the ancillary relief trial. The Court understands that because the Wife was under treatment for cancer, which was only diagnosed after the last order, she was not in a condition to make any application for variation at that stage. It is also obvious that her medical expenses increased dramatically after her diagnosis. At the same time, her ability to attend treatments at the beauty parlor or travel were restricted during her cancer treatment. In order to achieve a rough and ready compensation for those increased expenses, this order will be backdated to the date of the present application.
Legal Costs Contribution
102. The Wife’s application for the provision of a sum of HK$32.6 million or alternatively HK$300,000 per month for a period of 12 months as legal costs contribution.
103. Such applications are made under the umbrella of maintenance pending suit pursuant to section 3 of the MPPO, which provides as follows:
“Maintenance pending suit in case of divorce
On a—
(a) Petition or joint application for divorce; or
(b) Petition for nullity of marriage or judicial separation,
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 presentation of the petition or making of the application and ending on the date of the determination of the suit, as the court thinks fit”.
104. It is therefore clear from the wording of that section that that Court has no jurisdiction to order a lump sum provision.
105. Although these proceedings were commenced in 2013, the parties are nowhere near FDR. The discovery process was difficult and protracted. There is now a pending trial of the preliminary issue. There is no dispute that the Wife is in need of litigation funding or that the requested sum is well within the Husband’s ability to pay.
106. The Wife is the sole registered owner of a property in Parc Royale. During the initial stages of this application, the Wife wanted to resolve the issue of litigation funding without a contested hearing. She then proposed to the Husband that he should become the guarantor of a mortgage loan for the sum of HK$3.6 million by securing her property and such sum shall be held by her solicitors as costs on account for the sole purpose of financing her legal costs, and that the Husband shall be solely responsible for the monthly mortgage repayments and interest. The Husband indicated that he was, in principle, agreeable to the proposal. The parties then corresponded in the draft consent summons. However, before the terms of the summons could be agreed, the Wife became increasingly concerned about the security of her only home and asset for the following reasons:
(1) If the Husband should default in repayment of the mortgage loan, the bank will have the absolute discretion to decide whether to pursue the Wife and foreclose or sell her property. The bank is likely to do so if the Husband does not have sufficient funds under his name to settle the loan;
(2) If the Husband should unfortunately pass away or become incapacitated and his estate does not or cannot continue with the repayments, the bank will inevitably foreclose or sell the Wife’s property;
(3) The Wife’s fears were heightened by the fact that
(i) The Husband has no real properties under his name;
(ii) The Husband claims that half of his medical business belongs to the 2nd Respondent;
(iii) The Husband has a history of transferring very substantial sums to the 2nd Respondent;
(iv) The vast majority of the Husband’s income and assets appear to be parked in TF Ltd, rather than under his personal name.
107. The Husband says that the Wife is not entitled to her claim. He argued that the parties have reached a binding agreement on legal costs provision and the Wife should be held to it. Alternatively, he argued that the quantum requested by the Wife is unreasonable.
108. The principles under which these applications are decided are well settled. In Currey v Currey [2006] EWCA 311 held that an order for legal costs provision can be made if it is demonstrated:
“(1) That the applicant has no assets, or none that can reasonably be deployed;
(2) That she can provide no security for borrowing, or none which can reasonably be offered.
(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation.
(4) That she cannot secure publicly funded legal help at a level of expertise apt to the proceedings.
109. The Husband’s counsel has cited a number of cases in which binding agreements were reached in negotiations. However, even if there were a binding agreement, the Court has no power to order the Wife to mortgage her property. There appears to be no dispute that she is in need of legal costs provision in these proceedings. The issue will have to be decided according to the principles under Currey v Currey (supra), namely, whether the Wife has any assets which can be reasonably deployed.
110. The Currey test has been applied in a number of cases. In Rubin v Rubin [2014] 1 WLR 3289 at 3294, Mostyn J referred to his decision in BN v MA (maintenance Pending Suit: Prenuptial Agreement) [2014] Fam Law 443:
“The statutory provision, in my judgment, does no more than to codify the principles to be collected in this regard in the authorities, most recently in Currey v Currey (No 2) [2007] 1 FLR 946. Under section 22ZA(3) the court cannot make a costs allowance unless it is satisfied that without the amount of the allowance, the applicant would not reasonably be able to obtain appropriate legal services for the purposes of the proceedings or any part of the proceedings, and for the purposes of this provision the court must be satisfied in particular that the applicant is not reasonably able to secure a loan to pay for the services…”
111. The Court in that case also referred to TL v ML [2006] 1 FLR 1263 and went on to set out the factors that should be considered in such applications, which include:
“(4) The court cannot make an order unless it is satisfied that without the payment the applicant would not reasonably be able to obtain appropriate legal services for the proceedings. Therefore, the exercise essentially looks to the future. It is important that the jurisdiction is not used to outflank or supplant the powers and principles governing an award of costs in CPR Pt 44. It is not a surrogate inter partes costs jurisdiction. Thus an LSPO should only be awarded to cover historic unpaid costs where the court is satisfied that without such a payment the applicant will not reasonably be able to obtain in the future appropriate legal services for the proceedings.
(5) In determining whether the applicant can reasonably obtain finding from another source the court would be unlikely to expect her to sell or charge her home or to deplete a modest fund of savings. This aspect is however highly fact-specific. If the home is of such a value that it appears likely that it will be sold at the conclusion of the proceedings then it may well be reasonable to expect the applicant to charge her interest in it…”
112. In LCYP v JEK (FCMC 4880/2014, the Wife was a housewife with no regular income. The Wife had a property which was purchased as an investment property and was subject to a mortgage. The property was leased to a tenant and the rental was sufficient to cover the mortgage repayments. In the Wife’s application for maintenance pending suit (including legal costs provision), the Husband argued that the Wife’s property should be liquidated to cover her past or future legal costs. The Court found that it was doubtful if any bank would provide such a loan to the Wife. She has already many loans from personal friends and it was unreasonable to expect her continuous dependence on such loans in the future, especially when the Husband was in a position to pay. The Court also found that obtaining legal services in Hong Kong by offering a charge on the outcome of the litigation was neither practical nor feasible. Since the Wife was in possession of a landed property, it was unrealistic to expect her to get legal aid.
113. In DX v LN (FCMC 7870/2014), the Wife was also a full time housewife whilst the Husband was a businessman working in his father’s business, for which he was groomed to take over. They were both from the Wuhan but were married in 2006 in Hong Kong. The parties relocated to Hong Kong in 2010. In 2012 to 2013, the Wife discovered that the Husband was having an extra-marital affair. She moved out of the matrimonial home after removing her jewellery and some gold bars from the safe deposit box and withdrawing HK$3.2 million in cash from her own bank account as well as their joint account. She eventually rented a small flat near the former matrimonial home and started divorce proceedings in 2014. The Husband agreed that the marriage had irretrievably broken down but care and control of the children was hotly contested. During the custody trial in April 2015, the Wife claimed that almost all of her funds had been exhausted and applied for maintenance pending suit. The Husband argued that the Wife was unable to satisfy the Currey test. The Court found that although the Wife had a property in Wuhan, it was “simply not practical or reasonable for her to have to liquidate or deploy it as security for borrowing for her legal costs”.
114. In W v C (FCMC 2201/2014, 11 August 2014), the parties to the marriage were in their 60s and had six children. They started a goldsmith business together in the 1970s but the Wife became a full time housewife after the birth of the second child. The Husband set up another family with a madam Szeto in the early 1980s and had four children with her. The parties together with the six children emigrated to Canada but the Husband returned to Hong Kong shortly thereafter to continue with his business. His business flourished and he was also extremely successful in the investment in landed properties. At the time of her application for maintenance pending suit, the Wife had cash of about HK$30,000 and CAD 11,500 in her bank accounts. She had two properties under her name which had a net equity of HK$3.5 million and HK$2.55 million respectively. The Husband argued that the Wife was unable to satisfy the Currey test. The Court held:
“I regard that the so-to-speak Currey test should not be taken as an exhaustive test. The only governing principle remains that the court will make such order as it considers reasonable in all the circumstances of the case. The conditions in Currey v Currey were adopted by the Hong Kong Court of Appeal as providing prudent guidance to both judges and practitioners in this jurisdiction, but still the court has to consider all other factors that may influence the outcome of the application as well as the interaction between them and the conditions of the Currey test so as to achieve a reasonable and fair result.”
115. The Wife is the registered sole owner of her home. The Husband says that she is unable to satisfy the Currey test. As can be seen from the above cases, the Currey test does not require an applicant to have no assets. She must demonstrate that she has no assets which can be reasonably deployed. Although the Wife is the sole owner of a property, that is not only her sole asset but also her home. Although the Husband argues that the Wife is not suffering from CFS, there is no dispute that she not been in gainful employment since 2009 and that she was wholly dependent on the Husband for financial provision. She has no income. Not only has she exhausted her savings, she has had to obtain a bridging loan from a friend. Whilst her ability to resume employment remains to be decided, there can be no dispute that the Husband’s earning capacity is far higher than hers. The Husband admits that he has the ability to pay the requested sum. There is no possibility of her residence being sold at the end of these proceedings. There is already pending proceedings by way of a preliminary issue on the beneficial ownership of a number of properties which are under the 2nd Respondent’s name, to be followed no doubt, by another flow blown trial on the Wife’s ancillary relief application in view of the Husband’s hostile stance and attitude adopted throughout these proceedings.
116. In all the circumstances of this case, it is wholly unfair and unreasonable to expect the Wife to raise litigation funding by mortgaging her only home. This Court finds that the Wife is entitled to legal costs provision from the Husband.
Quantum of Legal Costs Provision
117. The Wife is asking for HK$300,000 per month for a period of 12 months. The Husband says that this sum is unreasonable since pleadings for the preliminary issue are already closed.
118. These proceedings were commenced in 2013 but the parties are nowhere near FDR. The discovery was difficult and protracted. The documentation is voluminous. The Wife has been represented by the same legal team for the last six years. By the time of her application, the Wife was already in arrears for her legal costs to the tune of over HK$1.8 million (which was to be further updated). Legal costs provision order should not normally include costs already incurred. However, with such a substantial sum in arrears, it is most unlikely, if not impossible that the Wife’s present solicitors would continue to act for her if no payment were made. If the Wife were to instruct another legal team, it would probably be just as expensive and a complete waste of costs for the new team of lawyers to peruse the papers.
119. It is noted that although the Husband now argues that the sum requested by the Wife is unreasonable, he actually agreed with the sum during negotiations for the mortgage of the Wife’s property.
120. In A v A (Maintenance Pending Suit: Payment of Legal Fees) [2001] 1 WLR 605, it was held:
“This wife has always been dependent on her husband. She is locked into a bitter struggle with him, whose outcome is of intense importance to her. She has an acute need for good legal representation and in circumstances in which her lawyers do not always have to be desperately economizing relative to the husband. He himself is spending huge sums on the litigation. He can, in my judgment, afford to pay the sums I have ordered and it is reasonable that I should require him to do so.
In Sears Tooth v Payne Hicks Beach [1997] 2 FLR 116, 118-119 Wilson J referred to:
“a grave and widespread problem encountered increasingly in the Family Division: namely, how can a spouse, usually a wife, who is ineligible for legal aid but who has negligible capital, secure legal advice and representation in order to pursue her rights against her husband, particularly one who is rich, litigious or obstructive or whose financial circumstances are complex and unclear?’
In my judgment, in an appropriate case, maintenance pending suit provides a partial answer and, for the reasons I have now given, I made the order in the present case. I add that, since I made the order, the House of Lords has given its judgment in White v White [2000] 3 WLR 1571. That did not, of course, impact at all on my decision which I had reached and announced several days earlier, nor on my reasons for it. However, Lord Nicholas of Birkenhead stressed in relation to the substantive outcome, that there is no place for discrimination between husband and wife and their respective roles. In my view, that substantive approach may be illusory if a wife is unable to vindicate it due to the difference in their capital and upon a wife’s ability to match the legal representation of her husband. The changing climate for the outcome of matrimonial litigation, which the House of Lords has clearly heralded, further fortifies me in my view as to financing its interlocutory stages.
121. I find that the sum requested by the Wife is reasonable in all the circumstances.
Orders
122. The Husband shall pay the Wife HK$220,000 per month as maintenance pending suit, such payment to be backdated to the date of her application;
123. The Husband shall pay the Wife a sum of HK$300,000 per month as legal costs provision for a period of 12 months. Such payments shall be made to and kept by the Wife’s solicitors and shall be used solely for legal costs in these proceedings;
124. Costs of and incidental to this application be borne by the Husband, on a party to party basis to be taxed forthwith if not agreed. There shall be certificate for Counsel.
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( A. Tse ) |
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District Judge |
Petitioner : Represented by Ms. Bonnie Cheng instructed by M/S Chaine Chow & Barbara Hung
Respondent : Represented by Mr. Eric Leung instructed by M/S Tsang Chan & Woo Solicitors & Notaries
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