H v. H

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1969 OF 2007

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J U D G M E N T

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1.  On 3^rd October 2007 I gave a judgment which required the Respondent Husband to pay the Petitioner Wife a sum of $75,000 per month by way of maintenance pending suit upon his undertaking to continue to be responsible for the education and medical expenses of their 3 children, a son and 2 daughters, and to arrange for his employer, a German family business controlled by his 2 cousins in Germany, to continue to pay for all her household expenses at the former matrimonial home in Clearwater Bay owned by the employer and her car expenses, and also to pay her $50,000 per month as his contribution towards her legal costs in their divorce proceedings. I arrived at this judgment by taking a broad brush approach, as is inevitable in most urgent applications for maintenance pending suit based entirely on affidavit evidence only and was intended as an interim measure pending the final determination of the parties’ ancillary relief claims.   

2.   I do not propose to recite the background of the case here, much of which can be found in my earlier judgment, but a major change in the parties’ circumstances has since arisen as a result of the sad demise of their son on 28^th October 2007, who it will be recalled had been suffering from an incurable metabolic disease known as MELAS, which has led to the 2 summons now before me, one taken out by each party : the Wife’s for a substantial increase to her maintenance pending suit to enable her to move out of the matrimonial home with the 2 daughters to a suitable alternative accommodation including its rental and running costs, and the Husband’s for the discharge of his monthly contribution towards the Wife’s legal costs as she should use her savings now that it is no longer necessary to retain it to meet any emergency medical requirements of their son. As at the last hearing, there was no opportunity for oral testimony and the parties simply just relied on their respective affidavit(s).

3.  I shall deal with the Wife’s application first. She had in fact found her accommodation in a 3,115 sq. ft. 3.5-bedroom semi-detached house at Henderson Road, Jardines Lookout, Hong Kong which the landlord was prepared to first renovate and let to her for 2 years with a break clause after 12 months at $165,000 per month plus rates and management fees of about $7,000 per month with a deposit of 3 months rental, but at the hearing I was given to understand that the landlord would not be prepared to wait any longer for the Wife’s confirmation and so by the time of this judgment, that property may no longer be available, nevertheless it is the Wife’s case that that is the kind of accommodation which is appropriate for her and the children for which the Husband should provide the funding by an upward adjustment to her maintenance pending suit accordingly.

4.  Apart from her wish to move to the Hong Kong side to be closer to the daughters’ school at the German Swiss International School on the Peak, the Wife’s case is that, as set out in her supportive affidavit of 20^th December 2007, she needs a property with at least 3 good sized bedrooms, secure car parking, an environment for pets and an outdoor area such as private terrace or garden, which is comparable with the high standard of living enjoyed by the family during the marriage and the level of annual income available to the Husband, such as the said property at Henderson Road or those listed in her estate agent’s information exhibited to her affidavit (PB6 : 1919, 1956-1970) where the monthly rentals range from $100,000 to $200,000, with most in the middle.

5.  In her said affidavit she also set out her estimated household and general expenses based on an accommodation of 3000 sq. ft. in a good area of Hong Kong with 2 domestic helpers and the running of one car (PB6 : 1923-4) which she says should be added to her maintenance pending suit to allow her to move out of the former matrimonial home, most of which are at present being met by either the Husband or his employer, which would bring the maintenance pending suit to close to $300,000 per month in total, although she would be prepared to accept an undertaking from the Husband to meet some of her expenses directly instead. In effect she is therefore seeking $165,000 for rent, $35,000 for household expenses, and $75,000 for personal and living expenses for herself and the daughters, totalling $275,000 per month.

6.  The Husband accepts the Wife’s need to move out of the former matrimonial, not just for emotional reason after the demise of their son, but also because the property is his employer’s residence in Hong Kong for the use of a representative of the company, it has become necessary for him to move back there now that they are divorced, and that it was upon their recent discussion that the Wife started looking for alternative accommodation for herself and their daughters, but he says he never envisaged that she would be seeking to rent at that kind of amount which he says he cannot afford, but rather a significantly lesser amount at around $100,000 per month, which is why he agreed to her renting the Henderson Road property by offering to contribute $105,000 per month towards the rental when she initially suggested that her boyfriend S would meet the balance of $60,000, and to pay the required deposit of $729,250 from their capital provided that it would be taken into account in their final settlement, but it later transpired that S has renewed the lease of his own apartment and would not be in a position to make the proposed contribution to the rental of the property that the Wife wants.

7.  In his affidavit the Husband set out what he thought should be the Wife’s household and general expenses (PB6 : 2035-6), and offers to pay $105,000 for her rental, $35,000 for her household expenses, and to continue to pay the current maintenance pending suit of $75,000 for the personal and living expenses of the Wife and the daughters, totalling $215,000 per month, which is all he says he can afford taking into account of his separate responsibility for the daughters’ school fees and extra-curricular activities. The essential difference between the parties is therefore their respective proposal as to the amount of rental for the Wife’s accommodation.

8.  Ms Irving submits for the Husband that while he had a total income of $6.37m in 2005/6 and almost $5m in 2006/7, his net monthly income after tax actually amounted to $444,828 in 2005/6 and $346,267 in 2006/7, and since he is already paying separately the daughters’ school fees, school bus, and medical insurance, the total of which is over $30,000 per month, plus their extra-curricular activities, the amount the Wife is now seeking together with these expenses of the children would exceed the Husband’s income even before he starts to pay any of his own expenses.

9.   Furthermore, it is argued that since a major part of his income is from a discretionary 5% of the profit shares of the employer company based on work done in China and Hong Kong which have been steadily profitable over the past several years, the Husband claimed in his 2^nd Affidavit (PB6 : 2029, 2032) that his employment contract is about to be revised to recognise that he has responsibility for all of Asia which will include India and other Asian countries where there will be considerable risk and set up costs which cause him concern that he will not be able to a profit share as generous as before in the future.

10.   While that remains to be seen, I agree that the Husband’s present figures appear to support his case that there is simply not enough income to maintain 2 households at the former standard of living that the parties used to enjoy in the event of the Wife moving out of the former matrimonial home. At the time of my earlier judgment, the household expenses and utilities of the Wife in the former matrimonial were paid for by the Husband’s employer, and there was of course no question of rental payment, while the Husband’s rent for his apartment in mid-level Hong Kong was a comparatively modest sum of $46,500 with obviously lower household expenses for himself alone. That was the situation then. Now the situation is to be reversed for the Wife to move out of the former matrimonial home with the children and the Husband to move back there on his own, it is clear that the saving on his rental and household expenses cannot make up for the much higher rental demanded by the Wife at more than 3 times of his, not to mention her obviously higher household utilities and expenses for a family of 3. The Husband says there is simply not enough income to meet the Wife’s demand. It is just simple arithmetic.

11. Mr.Pilbrow for the Wife however suggests that the Husband should be able to derive additional income from the bank interests earned from his substantial savings of some $10 millions as well as his stocks and shares portfolio, and criticises his taking upon additional liabilities of what appear to be very substantial insurance policies for the children shortly before the proceedings, which the Husband however says was necessary and was with the Wife’s approval. Whatever be the truth, it is not possible for me to ascertain at this stage without the benefit of the parties’ testimony and cross-examination, but it is quite clear that the money already paid under the insurance policies would be lost if the Husband were to cancel them in order to meet the Wife’s rental requirement.  

12. There is no question of the high standard of living which this family was able to enjoy during the marriage, as I have found in my earlier judgment, in particularly of the former matrimonial home which the Wife said in one of her earlier affidavits to be worth more than $100 million to buy and at least $200,000 per month to rent. However, that property is not a matrimonial asset of the parties, it does not belong to them. It is provided by the Husband’s employer as part of the benefits and privilege of his employment, and however luxurious and expensive it may have been as the parties’ home throughout the marriage, it is simply beyond their means to even come close to maintaining that standard with 2 separate households if they are to live elsewhere, and certainly not on the high end area of the Hong Kong island.

13. I accept that the Wife is not asking to duplicate the same standard in choosing her new apartment, the point is that with 2 households to support now that they are divorced, realistically the standard of their living will have to be adjusted accordingly. No doubt the questions of how much and to what degree such adjustment that each party and the children will and should have to make will be properly addressed and answered at the final ancillary relief hearing. So too will the question of the true extent of the Husband’s financial means and ability. At this stage there is simply not enough evidence before the court, and in the absence the parties’ oral testimony and cross-examination, to enable me to answer those questions or to reach any conclusion as to exactly what should be the suitable rental for the Wife’s accommodation, but as Ms Irving for the Husband has submitted, the Wife is not being asked to take accommodation at the rental that the Husband took for himself when he moved out of the former matrimonial home, and that she is being offered what appears to be a substantial sum of money for the time being to provide her and the daughters with some suitable and high end accommodation.

14. I say for the time being as I am dealing with a transitory period between now and the final hearing of the ancillary relief application probably within the next 6-9 months, and any decision to rent now must necessarily be transitional or non-permanent. While I can understand most people prefer not to have to move every 12 months or so, in particularly for the Wife and the daughters who have lived in the former matrimonial home almost the entire marriage, the reality is that there does not seem to be sufficient capital in the matrimonial assets at the end to allow the Wife to seriously consider purchasing her future accommodation, certainly not the type of property she has in mind, and that perhaps she will just have to rent on a short-term basis pending the final resolution of her claims.

15. If at the end and upon hearing full evidence from both parties, the court finds that there are sufficient income and capital to justify the Wife’s present choice of accommodation, no doubt she will then be provided appropriate funding to enable her to easily move to a bigger and more expensive property, but if on the other hand if she ends up having to down scale from the accommodation of her choice for financial reasons, there may well be adjustment problem in particularly for the children. I must stress here that I do for a moment suggest that the Wife’s application is improper or unreasonable, but given the circumstances and the evidence before me at this stage, I just find the Husband’s offer more preferable.

16. I shall next consider the Husband’s application for the discharge of the order requiring him to contribute $50,000 per month towards the Wife’s legal costs now that it seems unnecessary for her to retain her savings to meet any unforeseen emergency of their son. Again I do not propose to recite the principles here, except the relevant criteria applicable to this case : whether the Wife can demonstrate that her savings cannot reasonably be deployed in funding her own legal costs.

17. Her bank savings now stand at slightly below $500,000 after settling her legal costs from the last hearing, but as I understand it, she will soon be instructing the major accounting firm that she mentioned at the last hearing to carry out forensic examination of the family spending and the Husband’s interests in various companies for which I am told would cost in the region of some $250,000, which when taken into account together of her legal costs in the run-up to the final ancillary relief hearing, it is submitted on her behalf that she will exhaust her savings very soon and that her inevitable application for costs contribution from the Husband will simply be a waste of time and costs for all concerned.

18. While the Husband has confirmed that if and when that happens, he will no doubt reconsider his position to resume his costs contribution, I agree that since the Wife is now to move to a new accommodation, and that even if the Husband is to shoulder up the bulk of such costs, there will always be unforeseen expenses and requirements that have to be met from her savings.

19. Furthermore, it is my understanding that the Husband may have been funding his own legal costs from his savings which are undisputedly family assets. Given the much wider recognition and acceptance of gender equality by our jurisdiction these days in that a wife should not be disadvantaged as against a husband, and in the search for fairness between the parties in the exercise of my discretion, I accept that the Wife in this case does have a need to retain her savings to meet her own emergency needs and requirements as well as those of the daughters, and that under the circumstances it would not be reasonable to expect her to have to exhaust all her savings first before obtaining an order for costs contribution from the Husband. Accordingly I refuse his application.

20. Lastly, I believe it would be appropriate to reserve the question of costs of both applications until the final ancillary relief hearing, which is an order nisi to be made absolute upon the expiration of 14 days.