TKMJ v. FSS

FCMC 14864 / 2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 14864 OF 2014

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J U D G M E N T
(Leave to appeal)

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Introduction

1.  This application by the Petitioner husband for leave to appeal arises out of my judgment dated the 14 September 2015 when I made an order for maintenance pending suit and litigation funding as follows:

Order

37.  In such circumstances I will order that the wife do pay the husband an additional sum of HK$15,000 per month as maintenance pending suit. The order of the 14 January 2015 shall be varied to that extent. This is subject to the wife undertaking to continue to pay for the mortgage on the former matrimonial home and is in addition to her offer to pay the husband the sum of HK$515,000 (in order to cover his current indebtedness) within the next three days. I am told that the wife has not paid that sum to date.

2.  In so far as litigation funding is concerned I added:                             

42.   Generally speaking I also accept that there may be issues with respect to discovery which will need to be resolved prior to a FDR hearing – although it seems to me that they may not be of the magnitude suggested by Ms Yip. I accept therefore that the sum of HK$640,000 may not be sufficient to cover the litigation costs up to that date. By the same token I also accept the wife’s concerns that she should not be obliged to provide the husband with a blank cheque. Thus on a broad brush basis and on the understanding that the wife has offered to pay for the husband’s litigation costs up to and including the FDR hearing I would suggest that the wife do pay the husband’s solicitors the sum of at least HK$800,000, such sum to be used to pay the outstanding fees of HK$400,000 plus the ongoing costs of the litigation up to and including the FDR, to include any further applications for discovery. This sum does not include any component for the section 17 application. In the event that the husband intends to proceed with that application I will give liberty to apply on the issue of litigation funding for that application only. I accept that any sum advanced by the wife to the husband of a capital nature either for his debts or for litigation funding may be taken into account by the court at a final ancillary relief hearing.

43.  In the event that the wife does not choose to pay that sum within the next 14 days I will make an order for litigation funding in the sum of HK$100,000 per month with effect from the 1 October 2015 to be backdated to the 1 June 2015 (i.e. for four months - to cover the HK$400,000 which is presently outstanding).  

3.  It is the second aspect of this case namely the issue of litigation funding that the husband takes the greatest exception to.

The law’s development

4.  I am aware that since the Court of Appeal decision in HJFG and KCY [2012] 1 HKLRD 95, a practice has grown up in Hong Kong whereby the court is invited to endorse orders for lump sum payments to cover litigation funding on the premise that these sums are taken into account at the end of the day in any final judgment on ancillary relief, if agreement is not reached in the meantime. This appears to be on the premise that HJFG allows such an approach. There have been previous applications before me concerning litigation funding and the inherent unfairness that may arise as a result of making an order for costs of this type (see FCMC 17190 of 2014 (reported) and FCMC 6310 of 2015 Litigation funding (unreported). (Steps will be taken to ensure that the second of these decisions is now on the judiciary web site. Objection had been raised by the parties previously).

5.  I am indebted to Ms Yip for obtaining an original copy of the maintenance pending suit judgment in Charman upon which our own Court of Appeal decision in HJFG is based. In that judgment Coleridge J invited the husband to pay to the wife the sum of GBP5 million in order to put to bed once and for all of the interim debates about maintenance pending suit and the like. In the alternative if the husband did not agree to do this Coleridge J ordered that he pay maintenance pending suit of GBP30,000 per month. Consequently it was acknowledged that this was a conditional order. In our own HJFG and KCY [2012] 1 HKLRD 95, Hartmann JA, as he then was, invited the husband to pay the sum of HK$75 million to the wife. In the event that the husband chose not to pay that sum it was ordered that he pay maintenance pending suit of HK$800,000 per month plus litigation funding of HK$500,000 per month (see paragraph 126 of the judgment). In Charman Coleridge J states that the GBP5 million was “a payment on account of the eventual sum”. Likewise in HJFG Hartmann JA says that the HK$75 million would be deducted from the eventual sum that the wife received. In actual fact however if one looks at the final judgment of Charman it seems that the GBP5 million was not deducted – although what appeared to remain from that sum was arguably taken into account (see the asset schedule attached to the final judgment on ancillary relief).

6.  The main point to note from both of these cases is that a) there was no doubt that in both instances the court was dealing with very very big money. Ms Yip has suggested that the same could be said here. I have not seen any evidence to support that assertion as yet – but I accept that this may be subject to further discovery. b) In each case the issue of both maintenance pending suit and litigation funding is wrapped up together. The lump sum is proffered so that the wife is able to pay what she needs to pay in the short term (including legal costs) and in order to start reorganising her financial affairs. There is no doubt that in both cases the wife was entitled on the face of it to a lot more than the original interim lump sum payment proposed. Again that is not necessarily the case here. As can be seen from the perfected Draft Notice of Appeal the husband is now seeking a conditional lump sum of HK$10 million.  

The law on leave to appeal

7.  I am of course mindful of the test as set out in Section 63A of the District Court Ordinance which states as follows:

“Leave to appeal shall not be granted unless the judge hearing the application for leave is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.”

8.  It is generally accepted that there needs to be an arguable case in respect of an intended appeal, and, as I have said, that it has a reasonable chance of succeeding.  The Court of Appeal is unlikely to interfere with the exercise of the Court’s discretion unless it can be shown that it has clearly exercised that discretion incorrectly.  Alternatively, it will be necessary to show that the Judge was wrong on the law or in relation to a certain legal principle.

Discussion

9.  In this instance I shall give leave to appeal. I accept that the judgment made may lead to a possible unfairness and that it may not be appropriate for conditional orders of this nature to be made with respect to litigation funding only. Thus although this is an application with respect to the exercise of my discretion, it seems to me that it is important for these points to be considered further by the Court of Appeal. Other issues have been raised in the perfected Notice of Appeal. In so far as the estimate for cost is concerned it should be noted that the court relied on the figures provided by the husband’s legal team.

10.  Costs shall be reserved pending the outcome of the appeal. There shall be certificate for all counsel involved.