CYN v. LCH

FCMC 11251 / 2017

[2018] HKFC 115

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 11251 OF 2017

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Judgment
(Maintenance Pending Suit)

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1.  This is the petitioner wife’s application for maintenance pending suit in these divorce proceedings.

2.  For convenience, I shall refer the petitioner wife as “P” and the respondent husband “R”.

Background

3.  The parties were married in Hong Kong in May 2012.  This is a no child marriage.  P was a Mainlander and is now issued with a Hong Kong identity card.  R is a local Chinese.  During the marriage, the parties lived in their matrimonial home in Shenzhen which was purchased in their joint names.  It appears not to be in dispute that during the relationship R was working in Hong Kong and staying with his mother and siblings in a public housing unit.  He only returned to the matrimonial home during weekends and holidays.  As for P, she worked as an estate agent in Shenzhen.

4.  On 30 August 2017 P petitioned for divorce on the ground of R’s unreasonable behaviour.  I was informed by Mr Yeung, who acts on behalf of P, that the parties have come to an agreement that the ground for divorce will be changed to one-year separation with the consent of R.  As of now, the decree nisi has not been granted.  

The Petitioner’s Application

5.  At the beginning, P’s application for maintenance pending suit included a monthly sum of $10,000 as legal costs provision.  Subsequently, she has been granted legal aid; so this limb of application is not required anymore.  She is now seeking a monthly sum of $8,000, payable by R as from 19 December 2017, the date of her application.

The Petitioner’s Case

6.  P is now 31 years old.  As said, she used to work as an estate agent in Shenzhen.  At the request of R, she ceased her job and became a housewife sometime in February 2013.  Since then R gave her about $20,000 per month as her household and living expenses and the expenses for visiting Hong Kong. P’s case therefore is that during most of the time of the marriage, she was dependent upon R. Unfortunately, their relationship started to turn sour in 2014. This eventually culminated to the issuance of a notice of separation via her solicitors on R on 13 June 2017.  Shortly after this on 19 June 2017, R and his mother stormed the former matrimonial home and expelled her from it.  P is now staying at a rented premise in Shenzhen at the rental of RMB4,800.

The Respondent’s Case

7.  R, now 41 years of age, offers an entirely different version.  He denies P was dependent upon him during the marriage.  In truth, he said, she was all along in gainful employment as an estate agent in Shenzhen.  He even alleged that P is still working as such.   As far as money matters are concerned, his only contribution was on the utilities charges and management fees of the matrimonial home.   He also denies having expelled P from the matrimonial home in June 2017 as alleged.

8.  As far as this application is concerned, R’s case, in brief, is that he does not have the ability to maintain P.  He had been unemployed for nearly 9 months and is now earning a meagre income of $3,000.  Added to this is the heavy financial burden from his extended family that falls squarely on him. Consequently, he has no extra capacity to support P.

The Legal Principles

9.  Under section 3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“the MPPO”), 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 presentation of the petition or the making of the application and ending on the date of the determination of the suit, as the court thinks reasonable.

10.  The Court of Appeal in HJFG v. KCY [2012] 1 HKLRD 95 summarised the established principles,

“33. Jurisdiction to award maintenance pending suit to a spouse is statutory, being governed by the provisions of s.3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192. By that section the court is given a discretion to make an order requiring either party to the marriage to make to the other such periodical payments for his or her ‘maintenance’ as the court thinks ‘reasonable’, subject to the condition that the duration of any such order is limited to the period of what may broadly be called the divorce litigation.

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.”

11.  Further, in connection with the point made by the Court of Appeal in [37iv]of HJFG v. KCY, supra, the learned authors of Rayden and Jackson on Relationship Breakdown, Finances and Children (Issue 7 March 2018) commented as follows,

[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).

12.  Guided by the above principles, I now turn to the Application.

Issues to be Dealt with

13.  Clearly, there are various disputes of facts which cannot be determined on the basis of affidavit evidence.  To name a few: there are issues as to whether P was working during the marriage or whether she was entirely dependent upon R.  A relating issue is the extent of R’s contribution to his own family with P. However, as can be seen below, it does not mean that the court would not be able to come to any view or conclusion for the purpose of the present application.  For the disposal of this application, it is necessary for me to deal with the financial resources and earning capacity and the financial needs of the parties.

Petitioner’s Financial Resources / Earning Capacity

14.  According to P’s credit card statements, from August 2015 to September 2017, her credit card expenditure alone amounted to an average of $11,403 per month.  On the top of this, there are other expenditures that were paid in cash or by electronic means.  At the same time, P’s bank statements from 2012 up to March 2018 show she received her last income in the sum of RMB6,109 on 15 January 2013.  In any event, the figures show P’s average income was merely RMB4,800 (about $5,660) per month. Mr Yeung contends this evidence support P’s case that she ceased work in early 2013 and R gave her $20,000 per month.

15.  Apparently, there is no challenge from R on P’s alleged standard of living during the marriage.  What he disputes is the allegation that the money that was spent on sustaining this level of living was not from his; his only contribution was on the utilities charges and management fees of the matrimonial home.  Ms Li, who acts on behalf of R, draws my attention to 2 sums of money, being RMB 22,088 and RMB8,404, that were said to be commissions and deposited into P’s bank account on 23 May 2016 and 31 May 2016 respectively in support of the assertion that P was in gainful employment all the time.  Nonetheless, Ms Li fairly accepts that these 2 sums are the only income that R is able to trace from the bank statements over a period of 2 years.

16.  P explained that these monies were not hers. They were commissions received on behalf of someone else.  I am conscious that whether P was working during the marriage or whether these 2 sums were her money would be matters that have to be further investigated into in trial when the court would have the opportunity to hear the oral evidence of the parties and determine the veracity of their case.  That said, on the basis of the evidence before me, even if P was all along working during the relationship as alleged and even taking into consideration her own statement on her Form E that she was earning $8,000 to $10,000 per month, her income would not have been sufficient to sustain her living as documented in the statements.  Following this, I find P’s version that she was maintained by R during the relationship more believable.  I must caution that this conclusion is merely a preliminary one and for the purpose of the present application only.  The court should in no way be bound by this finding after having heard the parties’ oral evidence in trial.

17.  P said she has exhausted her savings and borrowings.  I was informed by Mr Yeung that she has now returned to work as from June 2018 as an estate agent on part-time basis and is currently earning about $3,500 per month.  I believe given time she should be able to improve her earnings.  For the time being, her means are insufficient to support her living; and this is apparently not being disputed by R.

Financial Needs of the Petitioner

18.  P stated her monthly needs to be in the region of $20,890.  Mr Yeung submitted that P would try her best to economize and so she is sensibly seeking a monthly sum of $8,000 only.  During argument, there is no challenge from Ms Li on the reasonableness of the sum as a whole or the individual item being claimed for by P.  The only challenge R has is the RMB4,800 rentals that P is now paying. R alleged that given P is living alone RMB4,800 is on the high side.  That said, Ms Li is not challenging the authenticity of the tenancy that P said she has entered into.  In my view, whether the premise is too large for P is a matter to be dealt with in the trial of the ancillary relief.  For the present purpose, it is inapt for the court to conduct a detailed investigation into the needs of the parties.  Rather, the court is entitled to conduct the analysis on a ‘broad-brush’ basis.  On any view, given the standard of living of the parties at the relevant time, I consider that $8,000 is a reasonable sum.

The Respondent’s Financial Resources / Earning Capacity 

Usual Movements of Funds

19.  In respect of R’s financial resources, Mr Yeung draws my attention to the unusual movements of funds in R’s bank accounts.  Mr Yeung emphasized that these unusual movements were deliberately plotted since they happened following the incident of June 2017 in which P alleged that she was expelled from the matrimonial home.  He specifically highlights 2 substantial sums.

20.  The first is a sum of $260,000 that was withdrawn in cash on 28 June 2017 from R’s Bank of China account.  R’s explanation, in his Answers dated 11 July 2018, is that the sum was for repayment of a loan in the total sum of $430,873.  He withdrew $260,000 in cash for repayment in part and the balance was fully paid in August 2017.  The loan was from a private finance company (私人財務公司), so no contract whatsoever was signed. During the substantive hearing, Ms Li submitted that R borrowed the money from a loan-shark.  This explains why there is nothing in writing.

21.  I find R’s answer highly unsatisfactory and dubious.  It is unsatisfactory because Ms Li is giving evidence from the bar-table.  The answer should have come from R in writing accompanied by his Statement of Truth.   It is dubious because there is utterly no explanation as to why R did not properly borrow from a bank or a licensed money lender but had to resort to a loan-shark. Certainly, it is not his case that his credit records at the time were so bad that he was not able to borrow through any lawful means.  Significantly, it should be noted that in his Form E of 8 January 2018 he reported having a liability as little as $677.  Even if he had borrowed in the way he described it does not necessarily mean there would not have been anything in writing. There is also no explanation as to how he repaid the balance of the loan as alleged.   Not only that his answer is devoid of particulars, it is against common-sense.

22.  The second sum involves $1.5 million which was deposited by way of transfer on 18 July 2017 into R’s Bank of China account but was immediately withdrawn in cash the next day.  R’s explanation is that the money was a loan from his mother. It was for the purpose of setting up a partnership business with his friend. However, the plan did not materialize; and his mother instructed him to return the money in cash, which he did accordingly.

23.  The mother’s bank passbook does show the $1.5 million in question was transferred to R on that date.  Yet, there are no particulars from R on the type or nature of business that he intended to engage in or, bearing in mind that he was still working full-time at the time, whether he was going to quit his employment. There is also the unusual feature where the plan was discarded and the money was quickly returned within an extraordinary short period of time.  $1.5 million is by no means an insubstantial sum.  My experience informs me that it is highly unusual for someone, especially R’s mother who is a retiree, to have chosen to keep such a substantial sum in cash.  In the ordinary course of event, out of concern for his mother R should have inquired about the reason for her instructions.  Plainly, these unanswered queries make the transaction highly dubious.  I take the view that R is far too economical with the truth.

The Respondent’s Earning Capacity

24.  R has been suffering from mixed anxiety and depressive disorder for which he has been receiving medical treatment since 2013.  He used to work as a safety officer for a construction company earning $32,240 but was dismissed in October 2017.  He is now in receipt of disabilities allowance of $1,965 per month. Ms Li informed the court that R is now working for a NGO with a monthly wage of $3,000 only.

25.  It can easily be seen the picture being painted is that R has a low earning capacity.   However, the objective fact is notwithstanding he has been suffering from this illness, he was during most of the time in gainful employment.  Further, the medical report of 30 April 2018 prepared by one Dr Tam of the West Kowloon Psychiatric Centre gives the opinion that,

“… (R), given his educational level and work experience, had the general and specific abilities and skills, both work per se and work-related, required to perform tasks/activities of paid work. Also, in spite of his illness, he maintained his cognitive functioning, thus capable of such things as problem solving, reasoning, judgment and decision making, and of independent living”.

26.  The report clearly confirms that R has normal working capacity.  Coupled with this is the fact that the disabilities allowance payable to him would expire on 18 August 2018.  As I see it, there is no reason why currently he would have chosen to work for a nominal income.   He should be able to earn the same income as before.

The Respondent’s Financial Needs

27.  R reported his total monthly expenses are as high as $38,640.  This is because he has to support, almost single-handedly, his entire extended family which comprised his mother, his elder brother and sister and his younger brother. The $38,640 includes the medical expenses of his elder sister and brother in the sum of $4,000 notwithstanding that at least his elder sister is in employment.  This sum also includes the maintenance for his mother and other ‘dependants’ in the total sum of $8,000.  Intriguingly, in spite of the fact that his younger brother is in gainful employment, R still has to support the living expenses of his entire family.  It is noteworthy that R’s mother seemed to be quite well-off.  Apart from R’s allegation that he borrowed $1.5 million from her, he maintained that the matrimonial home in Shenzhen was purchased by his mother and therefore she is the sole beneficial owner of the property.  If all these are true, there is much logic to ask why the mother does not make any contribution to the family expenses and instead, R has to give her money?

28.  According to R, he was unemployed from October 2017 till recently.  If his monthly expenses are as much as $38,640 per month, this begs the question of how he and his family have been able to survive during these months.  There is a dearth of explanation in this regard.  His present income of $3,000 as alleged is less than 10% of his monthly expenditure; naturally, the question is where does he have the money to support the entire family?  Even when he was in gainful employment, the salary he reported to have received ($32,240) was far less than the reported expenses. This would not have been sufficient to meet his ends. Again, there is no explanation as to how he was able to keep himself afloat. It has to be borne in mind that according to him, he too at the same time had to be responsible for the utilities charges and management fees of the matrimonial home.  If his version is true, he should always have been in the red.  Quite to the contrary, his bank passbook reveals that prior to July 2017, he constantly maintained around $250,000 to $270,000 in his bank account.

Conclusion

29.  Ms Li accepts there has not been any explanation to all the above queries.  On the above analysis, I have come to the view that R has grossly inflated his monthly expenses and he is also not truthful about his earning capacity and the whereabouts of the withdrawals.   I am of the view that the disclosure by R was obviously deficient.  I have determined that he failed to give a full and frank disclosure of his financial affairs.  The court is not confined to the mere say-so of R as to the extent of his income or resources.  I am prepared to draw adverse inference against him and make robust assumptions about his ability to pay and should err in favour of P: see [10] above; HKFG v KCY, supra, §§37 & 56 and Baker v Baker [1995] 2 FLR 829, Livesey v Jenkins [1985] AC 424 and F v F (Divorce: Insolvency:  Annulment of Bankruptcy Order) [1994] 1 FLR 359.

Order

30.  For the above reasons, I have no hesitation to give an order that R should pay a monthly sum of $8,000 to P as her maintenance pending suit, the first payment to be made on 1 August 2018 and thereafter on the 1^st day of each and every month until further order of the court.  I would back-date the order to 1 December 2017.  R should pay the arrears of $64,000 (8 months from December 2017 to July 2018) within 14 days of the order.

Costs

31.  I see no reason why costs should not follow the event.  I give an order nisi that R do pay P the costs of this application, to be taxed on party and party basis if not agreed.  P’s own costs to be taxed in accordance with Legal Aid Regulations.