S v. C

FCMC 15393/2018

[2021] HKFC 61

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 15393 OF 2018

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Judgment
( re : Maintenance pending suit )

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The Application

1.  By a Summons dated 31 August 2020 (the “Summons”), the Petitioner Wife (“Wife”) asks for:

(1)     Maintenance Pending Suit (“MPS”) of HK$30,000 from the date of Summons, and

(2)     HK$30,000 for legal cost contribution.

2.  When her employment was terminated by                                         .                in around October 2020, she adjusted her claim for MPS under (1) to $40,000.

Background

3. Wife is now 4  . She was a flight attendant employed by            . After more than 20 years of service, her employment was terminated by                  by on 21 October 2020 due to its business being affected by the Covid pandemic.

4.  The Respondent Husband (“Husband”) is now 4    .  He is a                      barrister and is a tenant at one                      set of barristers’ chambers in Hong Kong.

5.  Parties were married in 2007, they have two children:

(a)     Daughter    Y,                 now age 1    ; and

(b)     Son    B,                 now age 1  .

(collectively the “Children”)

6.  The parties separated in October 2016, the Wife left the matrimonial home, an apartment in Pokfulam.

7.  The Children live at the matrimonial home with the Husband, who becomes their primary carer, with the help of a domestic helper.

8.  The parties have had difficulties over the access arrangement of the Children, but this issue is not the subject matter of the Summons.

Development of these proceedings

9.  Wife filed her petition on 5 December 2018.

10.  Form Es were exchanged on 15 February 2019.

11.  By an Order made by consent on 16 September 2019, the parties were granted joint custody of the Children, with care and control to the Husband, and reasonable access to the Wife.

12.  Wife filed her first questionnaire on 17 September 2019, but the Husband did not respond in time per the Order of the Court.  According to the Wife, he belatedly faxed his answer to her only on 31 December 2019 without any supporting information.  While he obtained leave on 9 January 2020 for an extension to provide his answer, he did not file it until 2 July 2020.

13.  The Wife filed a second questionnaire on 31 August 2020, by the Order dated 24 August 2020, he had 42 days to answer which fell due on 12 October 2020.  However, this Court has still not received the Husband’s answer to this second questionnaire at the date of this judgement.

14.  The Wife also initiated this present Summons for MPS on 31 August 2020.

15.  On 21 September 2020, HHJ Melloy gave direction for this MPS application to be determined by paper disposal.  Parties were directed to exchange submissions on the 17 November 2020, this was done on time. However, without leave of Court, Wife’s counsel filed a reply submission on the following day calling it “her last word as applicant”.  The Husband must have found it hard to resist the need to file his reply submission as well, claiming it to be “a matter of natural justice”.  For the purpose of this decision and for obvious reasons, I will ignore both reply submissions.

16.  Decree Nisi was pronounced on 27 November 2020.

17.  On 23 February 2021, a memo was sent from this Court enquiring after the Wife’s job – hunting progress, and seeking an undertaking from her that she would inform the Court within 14 days of having found employment.  The Wife had promptly responded and also provided Court with her undertaking.

Issues

18.  The Issues are as follows:

(a)     What is the Wife’s reasonable needs for MPS and for legal costs provision?

(b)     Does the Husband have the ability to pay?

(c)     How much should the Husband be paying to the Wife as MPS?

(d)     How much should the Husband be paying to the W as legal costs provision?

Applicable Legal Principles: Maintenance pending suit

19.  The law is well known and not in dispute.  Section 3 of the  Matrimonial Proceedings and Property Ordinance Cap 192 reads:

“3. Maintenance pending suit in case of divorce …

On a –

(a) Petition or joint application for divorce …

     ….

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 reasonable.”

20.  I shall also make reference to Rayden and Jackson on Relationship Breakdown, Finances and Children where it said:

[11.78] There is no hard and fast rule, and no fixed proportion: each case depends on its own facts. The approach to maintenance pending suit should be empirical, and that 'in the ordinary sort of case the district judges who deal with these applications will have to take a broad view of means on the one hand and income on the other and come to a “rough and ready” conclusion', or take a 'broad brush' approach. The overriding consideration is the actual needs of the parties pending suit. Although the provisions of the MCA 1973, s 25 are expressed to arise only when the court is deciding whether to exercise its powers under s 23, 24 or 24A, the court may nonetheless have regard to the criteria listed in s 25 on an application for maintenance pending suit.

[11.79] In practice, as oral evidence is rarely given, it will be unusual for the court on an application for maintenance pending suit to be in a position to make findings of fact on issues in dispute sufficient, for example, to deal with conduct or allegations of non-disclosure. However, if it is demonstrated that the paying party has not performed his duty to make full and frank disclosure of his financial resources, then the court can take a broad and robust view of his means, and it does not have to accept and proceed on the basis of the assertions of the paying party as to his means and an inability to pay. The court can look at the reality of the situation and take into account voluntary funding from third parties (see TL v ML above).

21.  These principles have also been enunciated in the often quoted Court of Appeal decision in HJFG v KCY [2012] 1 HKLRD 95 where it was held inter alia that:

“34.  By definition, therefore, maintenance pending suit is restricted to payments which constitute ‘maintenance’, which are reasonable in the circumstances and which will endure for no longer than it takes to determine the divorce litigation.  ‘Maintenance’ is a broad concept.  I do not seek to define its exact meaning but it seems to me that it must be restricted to those payments necessary to meet the recurring costs of living at whatever standard of living is appropriate.  That being the case, no matter how great the wealth of the parties and how unevenly distributed that wealth may be at the time an application for interim maintenance is made, the court has no jurisdiction to make orders which for all practical purposes result in a form of pre-trial capital re-balancing.  In the present case, the judge recognised the long-established approach of looking to the “immediate and reasonable needs” of the wife and son.

35.  As to the amount of maintenance pending suit that may be paid, the Ordinance provides only that it must be ‘reasonable’, that is, having regard to the circumstances of the case, that it must be fair.  

36.  An important factor in determining fairness is a consideration of the marital standard of living.  In this regard, each case must be considered according to its own circumstances.  It is not simply to be assumed that great wealth equates to great extravagance.  Some married couples who enjoy great wealth spend with comparative modesty and with a discipline born of discretion, others enjoy consumption on a grand scale.

37.  The principles that have 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 High Court judge, in TL v ML and Others (Ancillary Relief: Claim against Assets of Extended Family) [2006] 1 FLR 1263, at 1289, in 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:

i.  The sole criterion to be applied in determining the application is ‘reasonableness’, which is synonymous with ‘fairness’.

ii.  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.

iii.  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.

iv.  Where the affidavit or form E disclosure by the payer is obviously deficient, the court should not hesitate to make robust assumptions 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 a situation, the court should err in favour of the payee.

38.  Finally, it is to be noted that in applications for interim maintenance, when the amount to be paid is for a limited period only and not all of 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.” (emphasis added)

22.  Therefore, the only governing principle is that the court shall make such order as it considers reasonable in all of the circumstances of the case. Consequently, applications such as these are approached on a broad-brush basis.

There will be subsequent opportunity at the decision of the ancillary relief stage to achieve fairness by means of a set off if there has been any overpayment or underpayment of the maintenance pending suit.

Parties’ Living standard during the marriage

23.  The parties’ matrimonial home was a two-bedroom apartment of approximately 1000 sq ft in Pokfulam with a clubhouse.

24.  The family used to take overseas holidays 4-5 times a year, taking advantage of the discount the Wife enjoyed as          staff; and stayed at 5-star hotels.

25.  Children attend good schools, and take up extracurricular activities of choice.  Prior to the divorce, there were two domestic helpers.

The Wife’s case

26.  When the Wife left the matrimonial home, she first moved to a 100 sq ft rented premises in Sai Ying Pun for $10,000; then in order to facilitate the Children staying over, she moved to a 400 sq ft property in Wanchai which rental was $17,000.  From February 2019 with declining financial resources, she shared a rented premise with her brother in Tai Hang, and they shared the rental of $25,500.

27.  Wife exhibited her payslips to her affirmation which showed a fluctuating income; over the previous 14 months, her average base salary was approximately $21,000 per month.

28.  Her employment was terminated by          on 21 October 2020, whereupon she received a termination payment of HK$333,306.91.

29.  The Wife claims that Husband has been in practice since 199-, he has a successful career, and has been the main income earner for the family. 

30.  Wife admitted to having accepted financial assistance from one    from June 2017 until August 2019; she also obtained a loan from her mother in August 2020 but had since repaid her on her demand.  She claimed to have around $380,000 left as of November 2020.

31.  On her Husband’s case, she has the following comments:

a.     She claims that Husband has understated his income.  That instead of the $130,000 - $150,000 he disclosed in his Form E, he should be making around $260,000 net of chambers expenses.

b.     That Husband had claimed some personal and household expenses, electronics, and even her own meal expenses as deduction from his gross income in his tax reporting. 

c.     Hence, the Husband’s declared net income in his Form E in fact came from computation of his taxable income (which was already net of the abovementioned expenses); but that these expense items were then repeated in his Form E.  More specifically, with reference to the Husband’s calculation of income and expenses for his tax returns in the years 2016-17 and 2017-18, and where he had provided no supporting documents of his expenses; she suggests that items such as rental payments, insurance payments, overseas travelling and local travel should be added back in to estimate more accurately the Husband’s real disposable income.

d.     She notes that the monthly expenditure of $167,764 exceeds his declared income of $130,000 – 150,000, which does not make sense, and clearly a result of his double counting his expenses.

e.     She also claims that some of his expenses are exaggerated, e.g. spending $10,000 on meals out of home alone, is not the usual standard of living during the marriage.

32.  The Wife also claims that the Husband had wilfully failed to disclose in his Form E that he had on 12 June 2018 and 13 August 2018 withdrew a total sum of HK$2,000,000 from his bank account and transferred to one YC; and that she will consider making an application under Section 17 of the Matrimonial Proceedings and Property Ordinance to set aside the disposition.  Husband also claimed to have lost over USD100,000 in investments between 2017-2019, Wife considers this to be his deliberate frittering away of family assets.  According to the Wife, these amounts together constitute a large part of the matrimonial assets.

Wife’s Needs

33.  According to the Wife’s Form E, she is the legal owner of a property in Shenzhen purchased in 2008. She claims that this was purchased by his brother and she has no interest in it.

34.  Her other assets are made up of cash in banks, securities and her MPF.

35.  The Wife asks for maintenance payment to enable her to rent a place of her own where the Children can sleep over when staying with her.  Her current premise is too small for the purpose especially when her brother is sharing the space. 

36.  Her needs were presented in her Form E and updated in her supporting affirmation to these Summons:

General Expenses

ITEMS	Per Form E 15 February 2019 (HKD)	Per Affirmation 31 August 2020 (HKD)	Comments (HKD)
Rent	17,000	12,750	Shared with her brother. Intend to move to a place at around the budget of 17,000
Utilities	1,500	1,500
Food	4,000	4,000
Household Expenses	2,000	2,000
Insurance	1,000	1,000
Sub - Total	25,500	21,250	Intended 25,500

Personal Expenses

ITEMS
Meals out of Home	4,000	6,000	More time spent with Children
Transport	2,000	4,000
Clothing / shoes	500	2,000
Personal Grooming	300	1,000
Entertainment / Presents	N/A	500
Holidays	0	0	Intended 5000 when travel ban uplifted
Medical / Dental	0	1000	Previously covered by employment but submit to be 1000
Tax	2,720	0	Subject to employment
Insurance Premia	1,500	6,500
Contribution to Parents	4,000	5,000
Sub - Total	15,020	26,000	Intended 31,000
TOTAL	40,520	47,250	Intended 56,500

37.  The Wife has been looking for a job after her employment was terminated by         , but without much success.  She is now enrolled into a training course in order to qualify as a Playgroup Tutor, the course appeared to have been postponed to 23 March 2021 from January due to the pandemic.

The Husband’s case

38.  The Husband said that he is not in a financial position to pay the Wife at all.

39.  He claims that Wife is having an affair with   , who had also supported her financially when she moved out including the payment of her rent.  He also claims that Wife hardly spent time with the Children, and repeatedly criticised her for having abandoned them. 

40.  The Husband argues that the Wife’s claim is looking to his means based on “2 highwater mark years” of income earning (being 2016-2017 and 2017-2018), which is no longer the case. He claims that having been practising at the Bar for 2 years, he cannot regard himself as having a successful practice.  He also states that for the past 10 years, he had work only because                                                 and will have to seek alternative employment.

41.  On the Wife’s expenses, he has the following to say:

a.     That the rent the Wife claimed had been paid by  or her employer          via rental reimbursement.

b.     That the Wife should not have acquired a new insurance policy requiring her to pay $5000 a month.

c.     That there is no need to pay financial support to her mother of $5,000 as her brother is wealthy.

d.     Generally unsubstantiated expenses claim.

Husband’s ability to Pay

42.  On the face of his Form E, the Husband has no fixed assets; similar to the Wife, his wealth is made up of cash in banks, securities and his MPF.  He rents the matrimonial home.

43.  Husband had provided his tax assessments over a number of years, the amounts thereon only showed “assessable profits”, which was obviously net of his claimed expenses.  The professional fees below came from the calculation of income and expenses of the respective years as well as a copy of his tax return for the year 2019-2020.

Tax Year	Assessable Profits	Professional Fees
2019 – 2020	--	1,832,500
2018 – 2019	2,127,187	--
2017 – 2018	2,750,719	3,861,500
2016 – 2017	1,390,857	2,730,500
2015 – 2016	1,657,773	--
2014 – 2015	2,262,999	--
2013 – 2014	1,253,264	--
2012 – 2013	744,000	--
2011 – 2012	619,368	--
2010 – 2011	1,078,634

44.  His copy tax return for 2019-2020 attached to his affirmation showed his declared gross income for the year as $1,832,500, and net of expenses was $934,748, giving him an approximate average monthly net income of $77,895.

45.  He claims to have difficult periods during the pandemic which affected his income, and he had to resort to his savings for his fixed expenses and to provide for the Children.

Analysis

46.  Referring the Wife’s arguments, I note that in the Husband’s computation of his taxable income, he had in addition to Chambers expenses and professional indemnity insurance, deducted such following items, inter alia:

ITEMS	2016-17 (HKD)	2017-18 (HKD)
Insurance	28,168	32,818
Rental payment	124,000	124,000
Overseas Travelling and Expenses	110,773	100,943
Local Travelling	30,000	30,000

47.  I am prepared to accept the Wife’s submission that he has possibly double counted his expenses. Therefore, I am of the view that the Husband has more disposable income than he had stated.  I do not have the opportunity to fully analyse the numbers as the Husband had failed to produce supporting information, but guided by the abovementioned legal principles, I am entitled to “err in favour of the payee”.

48.  I am also of the view that he had not make full disclosure.  There were long delays in his production of supporting information to his answer to the 1^st questionnaire. In his first affirmation in opposition to the Summons, while having the opportunity to defend his expenses in his tax return with supporting information, he had chosen not to do so.

49.  The 2^nd Questionnaire asked questions, inter alia, regarding the Husband’s expenses and for the on-going missing supporting information, it pursued questions on the $2,000,000 and about the investment loss he claimed to have incurred. The Husband had again chosen not to respond to date, in deliberate defiance of a Court Order.

50.  The Husband in his affirmation claims that the Wife’s application does not take into account his present income, the Children’s future needs which he has to bear alone and that the Wife has no intention of contributing to the Children’s future and well-being needs.  His approach is misconceived because these considerations are to be raised in the final ancillary relief claim, In this MPS application, I am only concerned here with the Wife’s immediate and recurring needs in the context of the Husband’s ability to pay. 

How much should the Husband pays the Wife as interim maintenance

51.  Mindful of the legal principles cited above, I am entitled to approach this decision on a broad brush basis and opt to draw the necessary adverse inferences against the Husband.

52.  The following is the breakdown of the MPS I intend to order for the Wife:

ITEMS
Rent	15,000
Utilities	1,000
Food	2,500
Household Expenses	1,000
Insurance	1,000
Sub - Total	20,500

Personal Expenses

ITEMS
Meals out of Home	2,500
Transport	1,500
Clothing / shoes	500
Personal Grooming	500
Entertainment / Presents	500
Holidays	0
Medical / Dental	1000
Tax	0
Insurance Premia	1,500
Contribution to Parents	0
Sub - Total	8,000
TOTAL	28,500

53.  In coming to this decision, I have the following considerations in mind:

a.     I agree that she should have her own accommodation where she can have private bonding time with the Children.

b.     As with all divorces, there are two households to be supported by the same level of income; one needs to be conscious that all spending has to be decreased to accommodate this change of circumstances. 

c.     Contribution to parents is not an immediate need in the context of this application.

d.     I have denied the cost of her additional insurance, and am of the view that this is an unwise investment in the light of an on-going divorce.

e.     The Wife has earning capacity despite the fact that she was in the same job for more than 20 years. She needs to earnestly look for employment to supplement her financial needs, and I would expect her to make more efforts in this regard. 

Applicable Legal Principles: Legal Cost Provisions

54.  So far as the law on the funding of litigation costs is concerned, Currey v Currey [2006] EWCA Civ 1338 continues to be referred to in Hong Kong as the leading authority. This case stated inter alia that:

“the conditions for a ‘costs allowance’ are as follows:

(1) That the applicant spouse has no assets, or none that can reasonably be deployed (at para [19], [20]).

(2) That she can provide no security for borrowing, or none which can reasonably be offered (at paras [19], [20]).

(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation (at para [20] and see Sears Tooth, per Wilson J).

(4)  That she cannot secure publicly funded legal help ‘at a level of expertise apt to the proceedings’ (at para [20])”

55.  At para [20], Wilson J further held “In my view, the initial, overarching enquiry should be into whether the applicant for a costs allowance could demonstrate that she cannot reasonably procure legal advice and representation by any other means.”

56.  The Court’s discretion is wide, and is also to consider the “subject matter of the proceedings”, and the “reasonableness of the applicant’s stance in the proceedings”. ([Para 21] refers)

Wife’s Legal Costs Provisions

57.  The Wife claims that her upcoming coming legal costs needs include:

a.     This MPS Application

b.     2^nd Questionnaire (which was issued) / Specific discovery

c.     Potential Section 17 application against the H’s disposition of HK$2,000,000

58.  She claims that the intended amount of legal costs required will be $450,000 over a period of 15 months, which means she will require $30,000 per month.  A breakdown of these costs was provided in the Wife’s affirmation.

59.  Regarding the Wife’s legal costs claims, the Husband said:

a.     That she could have borrowed from B or her brother.

b.     That she is the owner of a property in Shenzhen (although Wife claims that this was bought and financed by her brother).

c.     He questioned the loan which the Wife had purportedly borrowed from her mother claiming that the latter should not have the money and if she did would not have been living in public housing.

60.  The only substantial asset to the Wife’s name is the Shenzhen property which she claims to be beneficially owned by her brother.  The evidence produced in this regard is very limited, and no doubt further proceedings will need to be initiated to disprove her ownership to this property, and she will have the onus to do so. However, I do not have any information as to the value of this property, nor do I have information as to what she needs to do to leverage a property in the Mainland to obtain funds for legal costs.  I am however conscious that in the absence of a regular income, she will not be able to service any loan.

61.  For the sake of completeness, I will add that the Wife has no other assets which could be offered as security for borrowing; she is unable to obtain legal service by offering a charge against the outcome of the litigation, nor is she likely to be eligible for legal aid with the legal title of the Shenzhen property to her name. On a balance of probabilities, I am prepared to take the position that the Wife does not have immediate access to resources which could afford her any access to funds for legal costs. 

62.  I am of the view that that the Husband’s disclosure and litigation conduct has been less than satisfactory, if this continues, no doubt the Wife will be required to incur further legal costs just to ensure that the Husband complies with Court Orders.  To put her on a level playing field with the Husband, who clearly has more resources at hand, I shall order the Husband to make provision for her legal costs, but shall reduce the amount claimed to $20,000 on a broad brush basis.

63.  Looking at the marital assets of the parties, I will only add here that this is not a case where parties should continue with protracted litigation, but should take an approach to come to some finality on these proceedings with some pragmatism, wisdom and foresight through mediation.

64.  I will also make an observation here that I expect better compliance with Court Orders from the Husband being a member of the Bar.  He had also attached bank statements and tax assessment to his submissions; this is disappointing behaviour; he should know full well that this is unacceptable.

Costs

65.  The Wife’s application was occasioned by the complete lack of financial support the Husband is willing to provide, he had left her with no option but to come to this Court to apply for maintenance.  I will therefore make the Order for the Husband to pay the cost of this Summons.

Order

66.  I therefore make the following Orders:

a.     The Respondent shall pay maintenance pending suit to the Petitioner for herself in the sum of HK$28,500 per month, this payment to be backdated to 1 September 2020 and thereafter to be paid on the 1st day of each succeeding month until further order.

b.     The Respondent shall provide legal costs contribution to the Petitioner of HK$20,000 per month, this payment to be backdated to 1 September 2020 and thereafter to be paid on the 1st day of each succeeding month until the FDR or further order. It is further directed that these sums shall be paid directly to the Petitioner's solicitors on account of their costs.

c.     I make an order nisi that the Respondent shall pay the Petitioner's costs of and occasioned by this application on a party and party basis, including all costs reserved, to be taxed if not agreed, with certificate for counsel.  This order nisi shall be absolute 14 days from the date of this Order unless application is made to vary the same.

d.     The next First Appointment hearing be fixed on 13 July 2021 at 9:30 am in Court 4.  Both Parties to attend.

e.     The Respondent do file with the Court the bank statements and the tax assessment for the year 2018/19 he attached to his submissions, within 21 days of this Order.