C, MT v. M, P

FCMC 5451 / 2018

[2019] HKFC 276

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 5451 OF 2018

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J U D G M E N T
(Maintenance pending suit/Interim maintenance)

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Introduction

1.  This is an application by a Petitioner wife for maintenance pending suit for herself pursuant to section 3 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO) and interim maintenance for the only child of the family, a little boy, Hh who will shortly turn 7 years of age, pursuant to section 5 of the same ordinance. In addition, the wife seeks a contribution towards her legal costs as litigation funding.

The main issues

2.  In broad terms then there are only two issues to be determined namely a) how much maintenance should the husband pay to the wife for herself and Hh on an interim basis and b) should the husband also pay a monthly sum as litigation funding?

3.  The wife seeks an order in the sum of HK$81,700 per month broken down as a request for HK$48,000 per month as interim maintenance for Hh, HK$25,000 per month as maintenance pending suit for herself and HK$8,700 per month being the cost of continuing to hire the parties’ original domestic helper. In addition, she seeks HK$50,000 per month as litigation funding.

4.  The husband for his part put forward the following proposal at the hearing:

94. With a view to bring W’s MPS application to a settlement, H makes the following Open Proposal:-

H undertakes to directly pay for:-

(1)  W’s and Hh’s medical insurance so long as he is able to extend his medical insurance provided to him by his employer to cover them (cost to Husband is $5,281 per month);

(2)  The FDW’s costs (approx. $8,700 per month);

(3) 50% of the dog’s reasonable and agreed medical expenses [value changeable].

(4)  Hh’s agreed extra-curricular activities up to a maximum amount of $1,750 per month.

In addition to the undertakings, H offers to pay:

(5) The sum of $50,000 per month, being $15,000 interim spousal maintenance for W; and $35,000 interim maintenance for H;

95. The effect of the above offer is that H will be paying in excess of $65,731 (being 5,281 + $8,700 + [unknown] + $1,750 + $50,000) per month for the benefit of W and H.  This plus W’s income give her a net disposable income of $ 113,461.

96. H asks that the Court makes an order in terms of paragraph 94 hereinabove, with costs to H.

5.  It is of note that although the level of conflict in this case remains very high, the parties have nonetheless been able to come to terms with respect to the arrangements for Hh. By virtue of a consent order dated the 26 October 2018 the parties have joint custody of Hh, with care and control to the wife and defined access to the husband. There are also detailed agreements set out in the order with respect to his long term care including a review clause every 18 months or so commencing in April 2020.

6.  It is the husband’s case that he has been paying maintenance of just over HK$65,000 per month, although this sometimes took the form of direct payments to third parties. The husband also adjusted the sum to be paid, if, for example the wife paid for items by cheque from the paying account, which he had not agreed to.

Background 

7.  The parties married on the XX December 2007 and separated in or about November 2017. They are of similar age and they will both turn 41, this year. They are both Irish and they are both well educated. The husband is a solicitor and a partner with an international law firm in Hong Kong. The wife is also a qualified solicitor, but she currently works as a Teacher librarian. The wife issued a divorce petition on the 7 May 2018 and the decree nisi was pronounced on the 17 July 2018.  

8.  Both parties are working, but there is a significant disparity in their current salary. The husband earns a gross salary of just under HK$210,000 per month (i.e. HK$209, 475). It is accepted that his received income (i.e. net of his MPF contribution and medical insurance) is just over HK$200,000 per month (i.e. HK$202, 693 per month). The wife for her part earns just under HK$50,000 per month gross (HK$49,230 per month) and her received income is HK$47,730 per month (i.e. net of her MPF contribution). Thus between them there is just under HK$250,000 per month income, which needs to maintain two households. It is of note that the husband’s tax liability is, as one would expect, significantly higher than the wife’s (HK$277,403 was payable in 2019 i.e. just over HK$23,000 per month). The wife’s tax liability fluctuates because of her bonus. According to her tax demand for 2018/19 she paid just under HK$3,600 per month (HK$43,006 was payable i.e. HK$3,584 per month).   However, it is accepted that this could be as much as the c. HK$5,000 per month as claimed if taken over a two-year period. In addition, the school fees are covered by virtue of the wife’s employment and this is an additional benefit that accrues to her because of this. 

9.  The wife receives a guaranteed bonus every two years. The next bonus that she will receive will be in 2020. She has also received money from her brother. It has been suggested that these monies are not borrowed but are another financial resource at her disposal. In the short term however, and for the purposes of this application, I accept that these are more likely than not to be borrowings and that she will most probably need to repay them in due course.

10.  The husband for his part is also entitled to a bonus and he has also received additional ad hoc payments for a consultancy project. However, these are quite limited. There is no evidence to suggest that he is entitled to any other form of income apart from his salary and these other smaller payments. It is also his case that he has taken out a loan in order to help pay for his legal costs and to assist with his cash flow generally. It is also not disputed that the wife has taken some funds out of the joint bank account without the husband’s consent, including the sum of just over HK$150,000 in December 2018.

The law

Maintenance pending suit and interim maintenance

11.  The law is well known and not in dispute. Section 3 Matrimonial Proceedings and Property Ordinance Cap 192 states that 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. A detailed examination of the parties’ means may be examined at a later date at a full ancillary relief hearing if there is no agreement in the meantime, when there is then every opportunity to achieve fairness by means of a set off. In other words, if there is any overpayment or underpayment that can normally be rectified at a final ancillary relief hearing. Applications for interim maintenance under section 5 of the same ordinance are approached in the same way. As Rayden points out

…what really matters is the immediate and reasonable requirements of the wife balanced against the ability of the husband to pay for them, assessed using a broad-brush approach. (See paragraph 16.17 of Rayden, 18^th edition).

12.  Reference has also been made by each side to the Court of Appeal decision in HJFG v KCY [2012] 1 HKLRD 95 where it was held inter alia that:

“(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. That 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 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.”

What are the wife’s reasonable needs?

13.  Some of the difficulty in this case has been that the wife’s figures do not appear to “work”. In broad terms, even if I were to accept all of her estimated outgoings (which I do not) the wife still seems to be seeking more in maintenance than the total of her estimated outgoings.  

14.  In the wife’s schedule of income and outgoings she sets out her expenses as follows:

4.1 General

Item	Amount
Rent	HK$	38,000
Mortgage Instalments and life insurance (323 euro)	HK$	2,842*
Utilities (electricity, gas, water, Now tv, Netflix and HKBN broadband)	HK$	4,350 **
Management fees (for rental property) (135.57 euro)	HK$	1,193*
Food	HK$	9,000**
Household expenses	HK$	1,000
Car expenses (Car rental and insurance)	HK$	1,611**
Insurance premia (Irish house insurance – annual 485 euro)	HK$	355*
Domestic helper(s)	Currently paid by Respondent
Pet Bills (vet, food, grooming and medication)	HK$	4,000**
Other (Specify):
Hong Kong contents insurance	HK$	477.67
Travel insurance	HK$	248
Total monthly household expenses	HK$	63,076.67

4.2 Personal

Item	Amount
Meals out of home	HK$	4,000
Transport	HK$	2,000
Clothing/Shoes	HK$	3,000
Personal grooming (including haircut and cosmetics)	HK$	3,350
Entertainment/presents	HK$	3,500
Holiday	HK$	7,000
Medical / Dental	Paid by the Respondent’s Insurance
Tax (estimated) (63,500)	HK$	5,292
Insurance premia (included at household)	HK$	0
Interim maintenance	HK$	0
Contribution to parents	HK$	0
Dependent family members	HK$	0
Others (specify):
Phone bill	HK$	600
Skype credit	HK$	200
Pilates fee	HK$	650
Bootcam`p fee	HK$	960
MPF	HK$	1,500
Spotify subscription	HK$	58
iTunes	HK$	23
Social contributions at work	HK$	250
Total monthly personal expenses	HK$	32,383

4.3 Children

Item	Amount
Extra Tuition	HK$	1,200
School books and stationery	HK$	200
School trips (ePayment)	HK$	183
Transport to school (including school bus)	HK$	66
Medical / Dental (currently on work medical insurance)	Paid by the Respondent’s Insurance
Extra Curricular Activities	HK$	3,500 *
Extra Curricular holiday camps	HK$	450
Entertainment / presents	HK$	1,500
Holidays	HK$	3,000
Clothing / Shoes	HK$	2,000
Insurance premia (on work insurance)	Paid by the Respondent’s Insurance
Lunches and pocket money	HK$	800
Other Transport	HK$	625
Child-minding fees (when dh on holiday)	HK$	2,000 **
Uniform	HK$	450
Haircut	HK$	150
Total monthly expenses for children	HK$	16,124

Total monthly expenses(4.1+4.2+4.3)

HK$

111,583.67

This does not include the salary of the domestic helper at HK$8,700 per month. Thus I accept that if the domestic helper salary is included then at first flush the total that the wife seeks amounts to approximately HK$120,000 per month. However, the wife earns just over HK$47,000 per month net. She is seeking HK$81,700 per month. HK$81,700 per month + HK$47,000 = HK$128,700. Consequently, there appears to be a surplus here, even on the wife’s own figures, of approximately HK$8,700 per month.

15.  The solicitors for the husband have approached the math slightly differently, but they also come to a similar conclusion. In their written submission they state inter alia as follows:

43. Even taking W’s case to its highest and assuming that all her expenses (FDW’s costs included) are accepted, which for the avoidance of doubt is not accepted, her MPS claim should be no more than $71,284 per month (= $120,284 - $49,000 (as opposed to HK$47,000)). W claims $81,700 per month.

16.  There are also some other difficulties with the wife’s expenses. For example, she includes expenses that relate to the purchase of a property in Ireland, which are more in the nature of a capital expense and should not be included for the purposes of this application. I have marked these items with an * in the General Expenses in paragraph 14 above. She also includes the cost of running a car in Ireland, although she does not live there. The husband also complains, and with some justification that the utility expenses seem a little on the high side. I accept that they are capable of some reduction, likewise the food costs. In so far as the domestic helper is concerned, the parties seem to have accepted that this is a necessary expense, notwithstanding the fact that this cost is also higher than the norm. In so far as the vet bills are concerned I accept that these are likely to be in the range of HK$2,000 per month. I have therefore marked with a double ** those items that seem capable of some reduction. On a very broad brush basis therefore I will allow the wife HK$61,000 per month for general expenses, inclusive of the domestic helper’s salary and the vet’s bills as follows:

General

Item	Amount
Rent	HK$38,000
Mortgage Instalments and life insurance (323 euro)	N/A
Utilities (electricity, gas, water, Now tv, Netflix and HKBN broadband)	HK$3,000
Management fees (for rental property) (135.57 euro)	N/A
Food	HK$7,500
Household expenses	HK$1,000
Car expenses (Car rental and insurance)	N/A
Insurance premia (Irish house insurance – annual 485 euro)	N/A
Domestic helper(s)	HK$8,700
Pet Bills (vet, food, grooming and medication)	HK$2,000
Other (Specify):
Hong Kong contents insurance	HK$	477.67
Travel insurance	HK$	248
Total monthly household expenses	HK$	60,925

17.  In so far as the wife’s personal expenses are concerned, some of these are also relatively high. I will allow HK$26,000 per month inclusive of the tax estimate. I have though deleted the reference to MPF, as that has been taken into account in the estimate of her net income. It cannot be deducted twice. I have also deducted the reference to the social contribution at work. It seems to me that many of the other expenses can also be reduced a little and that on a broad brush basis HK$26,000 per month for the wife’s personal expenses seems about right.

18.  In so far as Hh is concerned, I accept that a total amount of HK$4,700 per month for extra tuition and ECA’s seems rather high. The father’s proposal of HK$1,750 per month for his share, conversely seems a little low. I will retain the extra tuition fees and the ECA’s shall be reduced to HK$2,300 per month. I have also deducted the reference to child minding fees when the domestic helper is on holiday, as this should not occur on a monthly basis and is excessive in any event. Thus I will allow HK$13,000 per month for Hh as follows:

Children

Item	Amount
Extra Tuition	HK$	1,200
School books and stationery	HK$	200
School trips (ePayment)	HK$	183
Transport to school (including school bus)	HK$	66
Medical / Dental (currently on work medical insurance)	Paid by the Respondent’s Insurance
Extra Curricular Activities	HK$	2,300
Extra Curricular holiday camps	HK$	450
Entertainment / presents	HK$	1,500
Holidays	HK$	3,000
Clothing / Shoes	HK$	2,000
Insurance premia (on work insurance)	Paid by the Respondent’s Insurance
Lunches and pocket money	HK$	800
Other Transport	HK$	625
Child-minding fees (when dh on holiday)	N/A
Uniform	HK$	450
Haircut	HK$	150
Total monthly expenses for children	HK$12,924.00

In total then it seems that the wife’s expenses come to approximately HK$100,000 per month inclusive of the domestic helper’s costs. 

19.  Given that I have accepted that the wife should be responsible for paying for her share of the Irish properties expenses, it seems that at most she may have slightly more than HK$40,000 per month available to contribute towards the monthly expenses. The balance of say HK$60,000 per month should be met by the husband. This is very close to the amount that he has proposed in his open offer.

Conclusion on maintenance pending suit/interim maintenance

20.  In conclusion then I will hold the husband to his undertaking to continue to pay for the wife and Hh’s medical insurance. The remainder of the expenses that he has offered to pay for directly namely the domestic helper’s salary, the vet’s bills and Hh’s ECA’s have been included in the wife’s schedule of expenses. On that premise the husband shall pay the sum of HK$60,000 per month, HK$31,750 per month as maintenance pending suit for the wife and HK$28,250 as interim maintenance for Hh.

Backdating

21.  The wife seeks backdating and for the costs of the application. I am not inclined to order that the maintenance be backdated especially given the fact that the final order is so close to the husband’s offer in any event. I am also cognizant of the fact that the wife has taken some funds from the joint account which she has presumably used for some essential expenditure in the interim including moving costs, rental deposit etc etc.

Litigation funding

22.  The wife also seeks litigation funding of HK$50,000 per month.

The law

23.  As far as the law on the funding of litigation costs is concerned, Currey v Currey [2006] EWCA Civ 1338 continues to be routinely applied in Hong Kong. This states 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])”

24.  There is also a requirement to undertake an overarching enquiry

At para [20], Wilson J held that 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. Therefore, to the extent that an applicant has assets (as in C v C), she has to demonstrate that they cannot reasonably be deployed (whether directly or as the means of raising a loan) in funding legal services …… Other factors may well come into play.  The subject matter of the proceedings would always be relevant, as would the reasonableness of the applicant’s stance in the proceedings.

Is this an appropriate case to award litigation funding?

25.  In this case I accept that there although there is a property in Ireland, this is not an asset that can reasonably be deployed for legal costs. It has been suggested that the wife can take out a loan, just as the husband has done, but it is difficult to see how a loan could be serviced on her current income. I also accept that it is unlikely that she would be eligible for Legal Aid and it is clearly not feasible for her to obtain legal services by any other means.

26.  The husband also complains about the wife’s litigation conduct and points to the fact that the FDR hearing was adjourned because of this application, which he believed to be unmeritorious. While I have some sympathy with him on this and it is clear, as I have said, that the levels of conflict between the parties remains high, nevertheless they have been able to come to terms on the divorce itself and on the arrangements for Hh. In such circumstances it seems to me that the husband should make some provision for the wife’s legal costs from his own savings/bank loan in order to take the matter up to the FDR hearing. The difficulty however is that the basis for the wife’s claim of HK$50,000 per month is very general, with very little specific information to assist the court in making a decision. In such circumstances and on the premise that there shall be an FDR hearing on the 2 March 2020, I shall order that the husband do pay the wife’s lawyers the sum of HK$50,000 per month for the next four months, such sum to be paid directly to them and held on account of costs. In making this order I accept that these funds will most probably need to come from the H’s own savings which included the monies from the loan account, which was taken out in part to assist with payment of his own legal costs.     

Costs

27.  It seems to me that at the end of the day neither party has been wholly successful. The order for maintenance pending suit/litigation funding was very close to the offer made by the husband, but he had made no offer for litigation funding and the wife has been partially successful in that respect. In such circumstances I shall exercise my discretion and make an order nisi to be made absolute in 28 days’ time that there be no order as to costs of this application including any costs reserved.

Order

28.  Consequently, I shall make an order as follows:

UPON the Respondent undertaking to continue to pay for the medical insurance for the Petitioner and Hh as long as he is able to extend his medical insurance provided to him by his employer to cover them.

IT IS ORDERED THAT: 

1) The Respondent shall pay maintenance pending suit to the Petitioner for herself in the sum of HK$31,750 per month and interim maintenance to the Petitioner for the child of the family in the sum of HK$28,250 per month, the first payment to be paid on the 1 November 2019 and thereafter to be paid on the 1^st day of each succeeding month until further order.

2) The Respondent shall pay as additional sum of HK$50,000 per month to the solicitor’s for the Petitioner, for a 4-month period from the 1 November 2019, as litigation funding.

3) The Petitioner and Respondent shall file and serve their amended questionnaires as attached to this judgment within the next 7 days.

4) Each side do file and serve their answers to the same within 28 days thereafter.

5) Valuation of the Irish property to be agreed between the parties, failing which a valuer shall be jointly appointed by the parties and a valuation report shall be filed not less than 7 days before the FDR hearing. The costs of such to be split equally between the parties.     

6) The Financial Dispute Resolution hearing has been set down for the 2 March 2020 at 2:30 p.m. with 2 hours reserved.

7) Both parties shall personally attend that hearing.

8) There shall be an order nisi to be made absolute in 28 days’ time that there be no order as to costs including all costs reserved.