DLS,MG v. A,SEA

FCMC 13941 / 2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13941 OF 2015

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J U D G M E N T
(Maintenance Pending Suit,
interim maintenance and litigation funding)

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Introduction

1.  This is an application by a Petitioner wife for maintenance pending suit pursuant to s 3 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO) and interim maintenance for the child of the family pursuant to s 5 of the same ordinance. Although not specifically pleaded in the Notice of Application for Maintenance Pending suit dated the 2 October 2015, it appears from the wife’s affidavits that she is also seeking provision for her legal fees.

The central issue

2.  Consequently the central issue in this case is how much should the husband now pay to the wife as maintenance pending suit for herself and interim maintenance for the youngest child of the family? In addition should the husband pay a monthly amount for litigation funding?

Background

3.  The parties married on the XX January 2004 and separated on the 1 September 2014. The wife is from Paraguay and the husband is from Kenya. They have six children between them. The wife has two elder children by her first marriage who are now self sufficient and a third child, S, by a previous relationship. It is the wife’s case that S was a child of the family and that she previously lived with the parties in the former matrimonial home. S is now living with one of the wife’s elder children and she is working but not earning very much. It is the wife’s case that she is also obliged to help maintain her. The husband for his part also has two children by a previous marriage. The eldest child also S, a boy, has recently returned to live with the husband. He is also currently residing at the former matrimonial home. He is in full time education and the husband is also maintaining him. In addition the parties have one child together, M, a girl, who is now 9 years of age. The parties are continuing to live under the same roof – a 2100 square foot village house in the New Territories.

4.  On the 13 June 2014 the wife issued divorce proceedings based on the husband’s unreasonable behaviour. These proceedings were defended. Sensibly the parties settled this aspect of the case and on the 9 September 2015 I gave leave for the wife to issue fresh proceedings based on one year separation with consent. On the same day it was also agreed that the parties would have joint custody of M, with care and control to the wife and defined access to the husband. However this is really a moot point given that the parties are still living under the same roof. No formal orders were needed in relation to the wife’s elder daughter S, who is now over the age of 18 years or the husband’s son S, who is arguably not a child of the family. It is the wife’s position that the living conditions are untenable and that she needs to move out with M and the domestic helper. She would also like her elder daughter S to live with her.

5.  On the 6 October 2015 I made a further order inter alia for interim interim maintenance for the wife and M in the total sum of HK$9,000 per month the first payment to be made on the 1 November 2015 pending further order. This was on the premise that the wife and M would continue to live in the immediate short term at the former matrimonial home.  

The law

Maintenance pending suit

6.  The Matrimonial Proceedings and Property Ordinance states that the only governing principle is that the court shall make such order, as it considers reasonable.  (See s 3 Matrimonial Proceedings and Property Ordinance Cap 192).  Consequently applications such as these are approached on a broad-brush basis.  Section 5 applications are similarly approached on the same basis. Therefore it follows that a detailed examination of the parties’ means may be looked at, at a later date if there is no agreement in the meantime. It is accepted that:

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 also paragraphs 16.17 of Rayden, 18^th edition).

Further

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 …… Any under provision or over provision in the order for maintenance pending suit can always be corrected when the account comes to be taken at the substantive hearing when there are every opportunity to do fairness by set off ……”

(Ref paragraphs 16.18 of Rayden, 18^th edition).

7.  Likewise the court may look to the assertions made by the wife and take a similar approach when looking at her own financial resources and alleged reasonable requirements.  The court should try to look to the reality of the situation, in so far as it can, in relation to bare assertions made by either the husband or the wife.

Litigation funding

8.  In so far as the law on the funding of litigation costs is concerned, reference should be made to Currey v Currey [2006] EWCA Civ 1338. This case is now routinely applied in Hong Kong and should therefore be relied upon in this instance.

In Currey v Currey [2006] EWCA Civ 1338,

“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])”

There is also a requirement to undertake an overarching enquiry

9.  In addition, in the context of this case, reference has been made to the Hong Kong Court of Appeal case HJFG v KCY [2012] 1 HKLRD 95.  This states inter alia that the court

(a) applies the sole criterion of “reasonableness” which is synonymous with “fairness”;

(b) has an unfettered discretion to award a reasonable sum;

(c) should be guided by the standard enjoyed by the parties during the marriage;

(d) should adopt the standard of this family and not any other families.  What appears to be reasonable for an ultra-rich family, is perhaps very generous or extravagant for an ordinary family;

(e) should consider the actual needs of the parties;

(f) is not engaged upon findings of facts and will adopt a broad brush rather than a fine sabre;

(g) is empowered to draw adverse inferences against the party who has failed to make full and frank disclosure and is not bound by the assertions of the parties;

(h) should still examine the monthly budget;

(i) bears in mind that adjustment can be made at the final ancillary relief.

(j) 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.

Discussion

How much should the husband now pay to the wife as maintenance pending suit for herself and interim maintenance for the child of the family M?

Credibility of the parties

The husband

10.  One of the main issues here concerns the general credibility of both the husband and the wife. On the day of the hearing the wife sought leave to file a further affidavit because she had evidence that the husband had at least three undisclosed credit cards. The husband had stated on numerous occasions in his evidence that he had no such credit cards. Consequently I gave her leave to file a further affidavit. It then transpired that the husband did have a number of credit cards which he had overlooked in his evidence. I gave the wife the opportunity to apply for an adjournment pending the production of the credit card statements but she elected instead to proceed on the premise that these statements would be produced prior to my writing up the judgment. On the 30 December 2015 the husband filed copies of credit card statements as requested going back over the last two years.

11.  However on a brief perusal of these credit card statements it does not appear that they take the matter very much further forward. The American Express card shows minimal spending, including monthly direct debits to Boingo Wireless and Itunes. There is occasional additional expenditure including payments made overseas. The Citibank credit cards show a similar pattern of fairly minimal expenditure. The Hong Kong visa gold card shows higher levels of general expenditure including those for petrol, food etc. However the levels are not particularly high and are in keeping with what appears to be the acknowledged standard of living enjoyed by the family during the marriage. It is also of note that the amounts outstanding were paid off in full each month.

12.  There are though other issues concerning the husband’s general credibility. He alleges that his company has gone or is going into liquidation and that he is relying on the rental income from his previous office premises to support himself and the family. The wife says that he is still working. There are other issues concerning the whereabouts of HK$8 million received from the net proceeds of sale from a property sold in July 2013, together with the so called debts owed to third parties that are basically undocumented, plus liabilities that appear to be company and not personal liabilities and monies apparently owed by the husband to his Uncle O – deceased. None of these issues have been satisfactorily dealt with to date.

13.  I do though accept that on the face of it the husband has historically run a small trading company and that his income from this was sufficient to maintain the family at a reasonable upper middle class level – that included a self owned home, overseas trips and the education of the children in the international sector.  

The wife 

14.  I also have some concerns about the wife’s credibility, although not of the same magnitude as that of the husbands. The wife also has her own small trading company; she says that she earns less than HK$5,000 from this source. Until recently she was in business with her elder daughter, who she says has also lent her money. It also seems that on occasions she has taken additional funds from the company or run expenses through the company. The extent of that still requires some clarification. In addition the wife sold a property previously held in her sole name to the same elder daughter in 2010 in order to raise funds for her company. This is the same daughter that the wife was working with previously and who presumably derived her only income from the same source – i.e. the same small trading company. This situation also needs to be further clarified.

15.  On the face of it however, I accept that the wife’s income from her own trading company is unlikely to be very high.

16.  In the past the husband’s business interests paid for the majority of the household expenses, including the mortgage on the matrimonial home, the school fees, general household expenses, food, most of the helper’s costs etc. He says that many of his present difficulties have arisen because the wife has filed a lis pendens against the properties which in turn has meant that the banks are no longer willing to lend him money to run his business. I accept that this may have caused the husband significant difficulties.

The wife’s case

17.  The wife is seeking a total of HK$70,000 per month inclusive of HK$20,000 per month for litigation funding plus an additional HK$30,000 for M. She has broken this down as HK$11,650 for the general household expenses, HK$5,500 for her own expenses plus HK$6,000 for M and S’s expenses. In addition she asks for a further HK$4,000 because the husband has stopped paying for his share of the domestic helper’s salary and an additional HK$3,000 to cover S’s increased expenses. This totals HK$30,150. She further argues that living with the husband is untenable and she seeks a further HK$18,000 – HK$23,000 in order to rent another property. In addition she seeks HK$30,000 for M’s maintenance. She also asks for litigation funding of HK$20,000 per month.

Accommodation

18.  Although I accept that it must be very difficult for the parties to continue to live under the same roof, I can see no other viable alternative at present. I accept that there are issues here with respect to the husband’s general credibility, however that does not necessarily mean that he is in a position to pay the wife an additional HK$18,000 – HK$23,000 per month in order that she might rent alternative accommodation in the short term.

S – the wife’s elder child

19.  The wife says that S is now living with her elder son and that she is working part time as a waitress. She says that S cannot find full time work and that she needs to help support her financially. The difficulty is that the wife was not able to provide any documentary evidence in support of her assertion that she is continuing to support S either at the original or at the increased level proposed.. Further given that S is no longer in full time education and although this is somewhat harsh, it follows that the husband does not really have any continuing obligation to support S – even if she is a child of the family. Further I do not necessarily accept at face value that S cannot find full time work. In such circumstances I will not include a contribution towards S’s expenses in the wife’s maintenance amount from the husband.

The wife’s own income

20.  The wife says that she earns less than HK$5,000 per month. I do not necessarily accept this. However it seems to me that in any event the wife must now do all that she can to increase her own income – whether that means continuing to run her own small trading company or seeking work in the open market. The wife’s own personal expenses are listed at HK$5,500 per month; without going into too much detail I would accept that on a broad brush basis the wife should be able to cover her personal expenses from her own income.

Other general expenses

21.  In summary then the wife says that she has the following anticipated general expenses, if one deducts the potential rental:      

Item	The Petitioner Amount (HK$)
General
Rent	0
Utilities (electricity, gas, rates, telephone & water)	650
Food	5,000
Household expenses	5,000
Car expenses	0
Insurance premia	0
Domestic helper(s)	5,000 (1,000 + 4,000)
Others
Sub-total	HK$15,650

22.  The wife complains that the husband has stopped buying food for the whole family as he did previously or that he is buying food that he knows they do not like. She also says that he is refusing to pay for the domestic helper’s full salary. Previously she contributed HK$1,000 and the husband contributed HK$4,000. In general I accept that the situation within the matrimonial home is probably very difficult and that these sorts of issues are probably symptomatic of that. In such circumstances I accept that it is reasonable for the wife to have funds to buy food for herself and M and to pay the domestic helper direct. I will though cut down the household expenses to HK$3,000. As will be seen I will also accept the husband’s undertaking to continue to pay for the utilities on the former matrimonial home in the sum of HK$650. In all then I accept that the wife needs approximately HK$13,000 for general household expense. Of that sum HK$5,000 shall be deemed to be M’s expenses as the wife would not have a full time domestic helper had it not been for M. Thus the expenses shall be divided between the wife and M – HK$4,000 for the wife and HK$9,000 for M.

The child’s expenses

23.  The main issue here relates to M’s extracurricular activities. The wife says that the husband has stopped paying for them. The husband has undertaken during the hearing to pay going forward. Historically M was learning to play the piano and taking a gymnastics class. The wife asks for an additional HK$2,000 per month to cover M’s extracurricular activities and a further HK$2,000 per month to cover other things including clothes etc. On a broad brush basis I will allow a further HK$3,000 per month to cover limited extracurricular activities and other items. 

The husband’s case

24.  Put simply the husband says that he cannot afford to pay anything more than the HK$9,000 per month previously ordered. He says that he is struggling to pay that. As indicated above he claims that he is in debt and that he has no alternative but to try to find employment in the open market. He sets out his essential expenses as follows:

i.	Mortgage Payment - HK$18,995.90 [Mortgage Loan Statement, Annex 1, R’s Answer]
ii.	Loan Payment - HK$30,000.00
iii.	Tuition Fees of the Child and Sean - HK$21,250 [§8, R’s Affidavit]
iv.	Utilities, Food and Household Expenses - HK$7,853 [§8, R’s Affidavit]
	Total: HK$78098.80.

The husband says that he has an income of HK$63,900 from renting out the business premises. The wife contends that he has the ability to earn other income.

25.  On the basis then that he will continue to pay for the utilities on the matrimonial home plus M’s school fees I will order that the maintenance payments be increased slightly to HK$4,000 per month for the wife and HK$12,000 per month for M. This is an additional HK$7,000 per month. I am of the view that the husband should have the financial resources to pay that sum in the short term including his ability to borrow. However this is clearly not ideal and I would strongly suggest in the circumstances that the parties consider trying to mediate the issue of final ancillary relief.  

Litigation funding

26.  On the face of it the wife has no assets (apart from her company) and certainly none that can reasonably be deployed by her for litigation costs. It follows that she can provide no security for borrowings and that she cannot obtain legal services by offering a charge on the outcome. She may be able to apply for legal aid – but the outcome is uncertain. In so far as an overarching enquiry is concerned as indicated above I have concerns about the position taken by each side in relation to this matter.

27.  The husband is able to instruct lawyers at present. I accept that the wife should likewise be entitled to instruct a lawyer. I will therefore make a reduced order that the husband shall pay the wife an additional HK$10,000 per month for her litigation funding with effect from the 1 March 2016 until the Financial Dispute Resolution hearing. This money shall be paid directly to the wife’s solicitors in the first instance. In making this order I accept that there may be no alternative but for some of these funds to come from increased borrowings from the husband.   

Costs

28.  Given that neither party has been entirely successful here although it would be fair to say that the wife has been more successful than the husband, I will make an order nisi to be made absolute in 14 days time that the husband do pay half of the wife’s costs on a party and party basis to be taxed if not agreed.