JHCI v. MSYI

FCMC 12528 / 2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 12528 OF 2011

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BETWEEN

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J U D G M E N T
(Maintenance Pending Suit
Ruling in relation to the costs of the dismissed divorce suit)

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Introduction

1.  There are two matters which need to be adjudicated upon in this judgment. The first is an application by the respondent wife for maintenance pending suit for herself and the two children of the family. This summons is issued pursuant to s. 3 and 5 of the Matrimonial Proceedings and Property Ordinance Cap 192.  The wife also seeks provision for her legal fees. The second is in relation to the costs of the original divorce petition filed by the wife. 

2.  On the 23 September 2011, I gave directions that each party file and serve a written submission in relation to the costs of the original divorce suit. The wife’s original petition was dated the 29 September 2010. It was based on the husband’s unreasonable behaviour. The petition was subsequently dismissed on the 23 September 2011. Short written submissions were then exchanged on the 7 October 2011. I will deliver my ruling in relation to that matter also at the end of this judgment. 

The issues

3.  There are a number of issues that need to be determined namely:

How much should the husband pay to the wife as interim maintenance for the two children of the family?

How much should the husband pay to the wife as maintenance pending suit for herself, if anything at all?

Should those maintenance payments be backdated and if so to what date?

Should any provision be made for the wife’s legal costs?

Who should bear the costs of the maintenance pending suit/interim maintenance application?

How should the issue of costs in relation to the first petition be determined? 

Background 

4.  This is a fairly straightforward case on the facts that has been fuelled to a very large extent by high emotion and attendant conflict which appears to have escalated as the case has progressed.

5.  The parties married in April 1998. This was the husband’s second marriage and the wife’s first. The husband is British and the wife holds an American passport but is of Filipino decent. Unfortunately the parties were unable to have children naturally. They were subsequently very privileged to be able to adopt two children – J, a boy who is now aged 11 years old and S, a girl who is now aged 8 years. Both children attend a well known international school in Hong Kong. They are presently living with the mother. Access has been very problematic. The husband has issued a number of applications in relation to various issues pertaining to the children. The wife has also issued a summons for leave to permanently remove the children to reside in the United States. That application is likely to be heard sometime next year. There now also appears to be a dispute over custody.

6.  Both parties work in the banking sector. The husband is 41 years old. He holds a senior position with an investment bank. The wife is 49 years old. She returned to work in April 2008 after a career break during which she concentrated on looking after the children. This also coincided in part with the parties spending a period of time in Singapore following the husband’s secondment there. The wife also works for an investment bank. Both parties’ earn good salaries, but it would be fair to say that the husband earns significantly more than the wife.

7.  The parties separated in August 2009. On the 29 September 2010 the wife issued divorce proceedings based on the husband’s unreasonable behaviour. In that petition she also sought joint custody of the children with care and control to herself and reasonable access to the husband. She now states that she had not wanted a divorce and had only instituted proceedings because her lawyer at the time had advised her to do so. She says that her intention had always been to try to reconcile with the husband.  She also claims that she had not known of the husband’s new relationship at that time. On another occasion she said that she had felt pressured by the husband to issue proceedings. In any event, regardless of these assertions, the fact is that the wife issued proceedings against the husband based on fairly mild unreasonable behaviour particulars notwithstanding the fact that it was open to her to proceed on the basis of one year separation with the husband’s consent. This had been the husband’s preferred option. On the 14 October 2010 the husband filed an answer denying the allegations of unreasonable behaviour quite generally and reserving his right to apply for leave to amend the answer and to file a cross petition. Just as it had been open to the wife to proceed on the basis of one year separation with consent (or once she had learnt of the new relationship on his admitted adultery), it had also been open to the husband to simply proceed on the basis of the wife’s original petition. He chose not to do so. In any event the wife did not progress her petition. There was significant delay – some of which was justifiable and some of which was not.  On the 7 September 2011 the husband filed a subsequent petition based on two years separation. On the 23 September 2011 the wife’s original petition was dismissed and all pleading were transferred to the new proceedings.

8.  It seems that immediately following the separation that the parties reached some kind of an accord with respect to interim maintenance. Although there is a slight discrepancy over the exact amounts for individual items, according to the husband’s evidence (as set out in his Form E dated the 10 December 2010), he was paying for the following items either for or on behalf of the wife and the children:

Contribution towards the wife's rent	- HK$53,000/HK$50,000
Household bills	- HK$15,000/HK$20,000
Medical	- HK$4,000/HK$2,000
Cash	- HK$20,000
Phuket property	- HK$7,000
American Club	- HK$5,000
School fees	- HK$30,400 over 10 months

9.  Although it is difficult to be precise it seems that the husband was paying something in the region of HK$104,000 per month plus the children’s school fees.

10.  This seems to largely accord with the wife’s evidence as set out in her Form E dated the 8 February 2011 which states that

Since August 2010, the Respondent has been depositing a sum of HK$20,000 per month into our joint account with HSBC.  This amount is used primarily to cover grocery bills and household expenses.  The Respondent contributes a sum of HK$50,000 per month for my current monthly rental of HK$62,000.  In addition, the Respondent further pays most of the household expenses including the children’s educational expenses.  I am responsible for the expenses of the children’s extracurricular activities and the rest of the household expenses.

11.  By letter dated the 16 May 2011 the husband sought to change the basis upon which he had been paying maintenance to date. Based on the parties respective incomes he proposed paying 61.58% of the children’s expenses on the premise that he earned that proportion of the parties joint income. Thus he offered to pay HK$60,037 per month for the children’s maintenance (i.e. HK$30,018.50 per month per child). In addition he undertook to continue to pay for a) the children’s school fees (HK$32,050 per month over 10 months or HK$26, 708 per month over 12 months), b) the American Club subscription and chits (HK$7,000 per month) and c) for the children’s therapy (HK$8,000 – 10,000 per month). In total then the husband proposed paying HK$75,037 – HK$77,037 per month plus 61.58% of the children’s extracurricular activities, which counsel has since estimated at HK$7,389 per month. In total then he offered to pay between HK$82,426 – HK$84,426 per month plus the children’s school fees. He also undertook to continue to cover medical and dental expenses for the children as before. In round terms therefore the husband was proposing a reduction of c HK$19,574 - HK$21,574 per month.

12.  On the 26 August 2011 the wife issued a summons for maintenance pending suit/interim maintenance and provision for her legal fees.  Initially she sought HK$205,250 per month plus presumably a continuation of the husband’s undertakings to pay for the school fees and other items as he does at present. She seems to accept that the husband is currently paying the amounts as set out above save for his contribution to the extracurricular activities. As at the date of the hearing she asked for HK$153,400 per month plus the school fees plus the continuation of his undertaking with respect to other items and provision for her legal fees at a further HK$50,000 per month.   

The law

13.  Applications for maintenance pending suit and interim maintenance for children are governed as I have said by s. 3 and s. 5 Matrimonial Proceedings and Property Ordinance, Cap 192. The only governing principle is that the court will make such order as it considers reasonable in all of the circumstances of the case.  Consequently maintenance pending suit/interim maintenance applications are approached on a broad brush basis.  A detailed examination of the parties’ means will be examined at a later date at a full ancillary relief hearing if agreement is not reached in the meantime. Any over payment or under payment can be dealt with then.

Recent case law

14.  Both sides have helpfully referred me to the recent Court of Appeal decision on maintenance pending suit namely HJFG v KCY (CACV 127/2011, 28 October 2011). Although a big money case and therefore factually very different from this case, the following principles bear repetition. The Hon Hartmann JA referring to Nicholas Mostyn QC’s judgment when sitting as a Deputy Judge in TL v ML and others [2006] 1 FLR 1263 at p 1289, said as follows:

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.

15.  In so far as the provision of legal costs is concerned, the Hon Hartmann JA confirmed that it is possible for provision for legal costs to be included in an order for maintenance pending suit. He added at para 78 as follows:

78.  S.3 of the Ordinance, of course, still required the judge to be satisfied that any contribution towards the wife’s on-going legal costs was reasonable.  That meant that he had to be able to conduct some analysis of the nature and extent and purpose of the contributions sought.  On the part of the wife, that required some breakdown of her anticipated costs.

79.  Aside from the fundamental requirement of supplying a sufficiently detailed breakdown of anticipated costs, I am of the view that the following principles articulated by Wilson LJ in Currey should in future be adopted as providing prudent guidance to both judges and practitioners in this jurisdiction.

80.  In the view of Wilson LJ, the initial, overarching inquiry should be into –

“… whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means. Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services.”

81.  As Wilson LJ pointed out, satisfying that condition alone may not be sufficient.  In the broad exercise of discretion, a judge may consider that other factors must come into play –

“The subject matter of the proceedings will surely always be relevant; and, insofar as it can safely be assessed at so early a juncture, the reasonableness of the applicant’s stance in the proceedings will also be relevant.”

16.  It is also understood that a fees allowance may be made for a period of time, most commonly up to the FDR hearing whereupon the matter may be considered afresh.

85.  Wilson LJ spoke of a legal costs allowance being structured, especially as to its duration, so as to best encourage a spouse in receipt of the allowance to act reasonably, looking in good faith to try and reach settlement.  In KGL v CKY (page 219), this Court adopted the same fundamental reasoning albeit by reference to the spouse paying the allowance:

“There is no reason why public funds should be expended to fund litigation when there are ample resources available within family funds. With proposals for more active juridical involvement in pre-trial proceedings to restrict the incidence of costs this is in line with the modern approach. The court can keep better control of litigation if it’s funding is at least in part within its purview. The party that controls the funds will be less willing to use them on unnecessary interlocutory procedures if he or she will have to provide funding for the other side.”

Discussion

17.  I must now turn to consider the issues, the law and the parties’ evidence as set out in their Form E’s, their affidavits (if relevant) and in their Answers to Requests for Further and Better Particulars.

How much should the husband pay to the wife as interim maintenance for the two children of the family?

18.  In the husband’s solicitor’s letter dated the 16 May 2011 the husband puts his case as follows:

Relying on the current financial disclosure our client has a gross monthly income of HK$401,485 (excluding his retirement plan contribution and the stock units and including the deferred cash) and your client has disclosed monthly income of HK$169,167.  Your client has not disclosed her bonus and we have therefore relied on your client’s last bonus as informed to our client of US$125,000 for this purpose.  Your client therefore has a monthly bonus amount HK$81,250 (HK$125,000 x 7.8/12) which makes her total monthly income HK$250,417.  The parties’ total joint monthly income is HK$651,902.  Our client earns 61.58% of that income and your client earns 38.42% of that income.  We have relied upon the parties’ proportional income and used this as a means to calculate their respective share of the children’s expenses.  Our client’s share of the expenses is then as follows:-

Expenses	Amount (HK$)	Respondent’s 61.58% share (HK$)
Rent (children's 2/3)	41,333	25,452
Utilities (children's 2/3)	8,000	4,926
Food (children's 2/3)	12,000	7,389
Domestic helper	4,650	2,863
Petrol and tolls (children's 2/3)	9,333	5,747
Extra tuition fees	4,500	2,771
School transport (children's 2/3)	8,333	5,131
School books and stationary	1,000	616
Entertainment and presents	5,000	3,079
Clothing and shoes	3,000	1,847
Uniform	350	216
TOTAL:	$97,499	$60,037

In addition to our client paying 61.58% of the children’s expenses he is also assuming 100% of the children’s school fees, the approximate amount of HK$7,000 for the American Club each month, the children’s medical and dental expenses and the children’s therapy expenses which is approximately HK$8,000 – HK$10,000 per month for J’s ADHD treatment and occupational therapy and S’s speech therapy and anxiety treatment.  Therefore our client will be paying children’s expenses as follows:-

- Children’s maintenance $60,037

- School fees $32,050

- American Club $7,000

- Children’s therapy ($8,000 - $10,000) $10,000

TOTAL: $109,087

Plus: medical and dental and his holiday expenses with the children.

Your client will pay children’s expenses of HK$37,462 (HK$97,499 – HK$60,203).  Each party is to pay for their own holidays with the children.

In relation to the children’s extra-curricular and extra-tuition activities our client proposes that the parties continue to discuss and agree which activities and tuition the children should participate in from time-to-time and our client will reimburse your client 61.58% of those expenses within 14 days of production of receipt.

The parties’ respective incomes 

19.  The initial difficulty I have with the husband’s proposal is the assumptions that it makes in relation to the parties’ respective incomes. In the letter of the 16 May the husband says that his gross salary in 2010 was HK$401,485 per month excluding his retirement plan contribution and the stock units but including the deferred cash. In his 2010 compensation summary attached to the letter his total remuneration package salary is set out as follows:

		2010
Base Salary	HKD	3,200,000.00
Cash Bonus	HKD	656,471.59
Deferred Cash	$	94,640.26
- 25% paid in July 2011	$	23,660.07
- 25% paid in December 2011	$	23,660.07
- 50% paid in July 2012	$	47,320.13
Stock Units	$	33,403.00
Retirement Plan Contribution	HKD	78,776.59
TOTAL REWARD	HKD	4,930,000.00

20.  If one includes deferred cash, stock units and retirement contribution his salary is HK$410,833 per month. Without the stock units and retirement contribution his salary for 2010 was HK$329,259 per month. According to his Form E his salary as at December 2010 was c HK$380,000 per month. Given all of this I will approach this on the premise that the husband was earning approximately HK$330,000 per month net of stock and retirement contribution for 2010, but that his salary has since gone up to something in the region of HK$401,485 per month – say HK$400,000 per month, including his deferred cash but not the retirement plan contribution and stock units. In other words I accept what has been said in this respect in his solicitor’s letter.   

21.  In so far as the wife is concerned the letter from her employer dated the 21 September 2011 states as follows:

This is to confirm you commenced employment with [the bank] effective April 2008.  Your current capacity is Vice President in Investment Banking Division with an annual remuneration of HK$1,550,000.  You also receive an annual other allowance of HK$480,000.  This allowance is subject to change in accordance with prevailing Company policy and the allowances will not form part of your Total Compensation.

We further confirm your 2010 discretionary variable incentive award, paid in February 2011 is USD20, 512.00.

22.  Thus the wife currently has an income of HK$129,166 per month plus an allowance of HK$40,000 per month making a total of HK$169,166 per month.  In putting forward his offer the husband has assumed that the wife will receive a discretionary bonus of US$125,000 per annum, whereas it is clear from this letter that last year she received a bonus of US20, 512. In the wife’s counsel’s submission she says that she now has a gross income of HK$182,458 per month. This presumably includes the discretionary bonus. I will therefore approach this aspect of the case on the premise that the wife has a salary before bonus and taxes of c HK$169,166 per month – rounded up to say HK$170,000 per month. I have not included her discretionary bonus in this, although I accept that it is another financial resource that is available to her and that the amount she receives will vary from year to year depending on market conditions. This is something that I will refer to again later.

23.  Consequently it seems to me that the basis upon which the husband makes his proposal is fundamentally flawed in that it assumes levels of income that the wife may not have. I am therefore proceeding on the basis that the husband is earning approximately 70% of the parties’ joint income. (70% x HK$570,000 = HK$399,000)

24.  The other difficulty I have had is that the husband has not included all expenses in the schedule contained in his solicitor’s letter. Generally the first point of reference for this is the Form E. The wife’s schedule for General expenses as set out in her Form E is as follows:

4.1  General

Item	Amount (HK$)
Rent (HKD 50,000 paid by respondent)	62,000
Mortgage instalments	N/A
Utilities (electricity, gas, rates, telephone & water) (Paid by Respondent)	12,000
Management fees	N/A
Food (grocery + market + taxi + parking) (Paid by Respondent)	18,000
Household expenses (Furniture, subscriptions/Watson’s water, BBQ gas)	7,500
Dry Cleaning & Household repairs (Paid by Respondent)	2,000
Car expenses/loan/insurance/registration/ /maintenance	9,000 (including car loan of HK$6,253 per month)
Insurance premia (household/Travel)	900
Domestic helper(s) – HK$4,000 each + Helper insurance – HK$250/month (Respondent pays HKD 4,000 for helper and I pay the remaining insurance costs for helper(s) + Driver – HKD 12,500)	17,000
Others (specify) – Petrol / toll (Paid by Respondent)	14,000
Total monthly household expenses	HK$142,400 (of which the Respondent now contributes HK$100,000 and I pay the remaining sum of HK$42,400)

25.  The husband in his letter of the 16 May has accepted the wife’s estimate for rent at HK$62,000, utilities at HK$12,000, food at HK$18,000 and, petrol at HK$14,000 but has attributed 2/3 of those expenses to the children. He then proposes that he pay 61.58% of those expenses. Given that I accept that the wife’s counsel was correct to assume that the husband was not going to challenge the actual level of those expenses. Counsel for the husband has now tried to do so, albeit very late in the day, on the basis that the court is required to look at the expenses critically. Although I do of course accept that that is generally speaking the correct approach, it seems to me that had that been the husband’s case that he should have made that clearer a lot earlier in the proceedings. I have noted that the husband has also accepted many of the wife’s estimates in relation to the children’s actual expenses. In those circumstances I agree that it should not be open to the husband to challenge those expenses now – at what is the 11^th hour.  

26.  I am also concerned that the husband has completely left out of his calculation the following General expenses save for the fact that the domestic helper was included in his schedule, but not the driver:

Household expenses (Furniture, subscriptions/Watson’s water, BBQ gas)	7,500
Dry Cleaning & Household repairs (Paid by Respondent)	2,000
Car expenses/loan/insurance/registration/ /maintenance	9,000 (including car loan of HK$6,253 per month)
Insurance premia (household/Travel)	900
Domestic helper(s) – HK$4,000 each + Helper insurance – HK$250/month (Respondent pays HKD 4,000 for helper and I pay the remaining insurance costs for helper(s) + Driver – HKD 12,500)	17,000 IN PART

27.  In the remainder of the wife’s Form E she has set out her personal expenses and the expenses for the children as follows:

4.2 Personal

Item	Amount (HK$)
Meals out of home with children	5,000
Transport (taxis / bus)	600
Clothing / Shoes	10,000
Personal grooming (including haircut and cosmetics)	5,500
Entertainment / presents	2,000
Holiday (airfare/food/entertainment) Regional trips x 4 US trips x 2 Food + entertainment Shopping	1,800 2,000 4,000 4,000
Medical / Dental	7,200
Tax – US (federal and state)	6,000 + State – To Be Confirmed (“TBC”)
Tax – HK	40,520
Insurance premia
Interim maintenance
Contribution to parents
Dependent family members
Tax accountant / financial consultant for US taxes	2,200
Others (specify) (yoga classes/gym)	1,500

4.3 Children

Item	Amount (HK$)
School fees (Paid by Respondent)	30,400
Extra tuition fees (summer camps + field trips) (Paid by Respondent)	4,500
School books and stationery	1,000
Transport to school (including school bus) taxis	200
Medical / Dental (Immunotherapy/medication)	6,000
Extra Curricular Activities (tutors/activities, therapist)	22,200
Entertainment / presents (parties/membership to Disneyland, Ocean Park, movies, computer games, CDs Dvds) (Paid by both)	5,000
Holidays (paid by both
Air tickets (3x Phuket trips) x 3 (including helper)	4,250
Air tickets 2x to US	4,000
Summer vacation elsewhere	2,500
Food + entertainment + shopping	5,000
Clothing / Shoes	3,000
Insurance Premia	TBC
Lunches and pocket money (Paid by both)
Other Transport
Child-minding fees
Uniform	350
Others (specify) – American Club (meals + activities) (paid by respondent)	7,000
Total monthly expenses for children	HK$95,400 (of which the Respondent contributes HK$34,900 whilst the remaining sums are either paid by us both or I pay solely)

28.  In so far as the wife’s own expenses are concerned I have some difficulty with the estimate for tax at HK$6,000 plus HK$40,520 per month. I do not accept that estimate – which does not appear to be in keeping with the wife’s tax demand in any event.       Although I accept that the wife will be obliged to pay both HK and US taxes it does not seem to me that she is likely to be paying such a large amount. Some of the other expenses also seem to be on the high side (e.g. clothing/shoes – HK$10,000 per month, personal grooming HK$5,500 per month).

29.  In so far as the children’s expenses are concerned, it seems that most of these have been accepted by the husband without challenge.    

30.  Unfortunately the wife then chose to produce a slightly different schedule of expenses in her most recent affidavit. It is this schedule that she now seeks to rely upon in support of her application.

Item	Actual Spend	H to pay	M to pay
1. Rent on RBG	62,000	50,000	12,000
2. Utilities	12,000	12,000	0
3. Food (home)	18,000	18,000	0
4. Helper	4,650	4,650	0
5. Petrol and tolls	20,000	20,000	0
6. Extra tuition fees	4,500	4,500	0
7. Taxi + school transport	500	500	0
8. School books	1,000	1,000	0
9. Entertainment / presents	5,000	5,000	0
10. Clothing / shoes / pocket money / uniform	10,000	5,000	5,000
11. Driver	12,500	0	12,500
12. Helper's insurance	250	0	250
13. Summer camps	833		833
14. After school activity	22,200	11,100	11,100
15. Meals out	5,000		5,000
16. Household expenses	4,000		4,000
17. Car	9,000	0	9,000
18. Car insurance / registration	1,100	0	1,100
19. Airfares	4,700	4,700	0
20.US Medical and ADHD med	3,640		4,000
21.American Club	7,000	7,000	0
22.Children's medical and dental	10,000	10,000
	242,173	153,450	64,783

31.  With respect I have not found this very helpful as it makes it difficult to compare one against the other. In broad terms however the wife is seeking HK$153,450 per month plus, it would seem, an undertaking from the husband to continue to pay the school fees, the children’s therapy and the maintenance costs for the Phuket property. The wife’s approach is largely based on what she says was the established practice during the marriage and post separation. However the net result is a request for a much higher payment compared to the original amount that the husband was paying prior to the 1 June 2011.

How best to approach this case?

32.  If one were to approach this case on the same mathematical base as suggested by the husband but on the premise that a) he contributes towards 70% of the children’s expenses as opposed to 61.58% and b) all of the expenses are included, the schedule would look something like this:

Item	Actual Spend	H to pay 70%	Wife to pay 30%
1. Rent (Children’s 2/3)	41,333	28,934	12,399
2. Utilities (Children’s 2/3)	8,000	5,600	2,400
3. Food (home) (Children’s 2/3)	12,000	8,400	3,600
4. Helper *	4,650	3,255	1,395
5. Petrol and tolls *	20,000	14,000	6,000
6. Extra tuition fees **	4,500	3,150	1,350
7. Taxi + school transport *	500	350	150
8. School books *	1,000	700	300
9. Entertainment / presents *	5,000	3,500	1,500
10. Clothing / shoes / pocket money / uniform *	10,000	7,000	3,000
11. Driver *	12,500	8,750	3,750
12. Helper’s Insurance *	1,000	700	300
13. Summer camps *	833	583	250
14. After school activity **	22,000	15,400	6,600
15. Meals out (Children’s 2/3)	3,333	2,333	1,000
16. Household expenses (Children’s 2/3)	2,666	1,866	800
17. Car (Children’s 2/3)	6,000	4,200	1,800
18. Car insurance / registration (Children’s 2/3)	733	513	220
19. Airfares	-	-
20. US medical + ADHD meds (Children’s 2/3)	2,426	1,698	728
21. American club	-	-
22.	-	-
TOTAL	158,474	110,932	47,542

33.  Thus the expenses attributable to the children would amount to something in the region of HK$158,500 of which the husband should be contributing c HK$111,000 and the wife c HK$47,500. This analysis is based on the wife’s figures. I have attributed 2/3 of all the household expenses to the children and 1/3 to the wife. The expenses have then been split on a 70%:30% ratio in keeping with each party’s respective earnings. In so far as the expenses directly attributable to the children are concerned these are likewise shared in the same ratio. I have marked those with an *.  I have included the expense of the domestic helper and the driver in this category as it seems to me that these expenses are mainly attributable to the children. Likewise the cost of petrol.

34.  Consequently if this approach is adopted, as seems sensible in the circumstances of this case given that both parties are working and earning a good salary, the husband would be expected to contribute in the region of HK$111,000 per month towards the children’s expenses.  

35.  In addition, given that the husband is earning significantly more than the wife, it does seem to me to be fair and reasonable to hold the husband to his undertakings to pay for the school fees, the American Club fees and chits up to a maximum of HK$7,000 per month, the children’s therapy up to a maximum of HK$10,000 per month, and the cost of maintaining Phuket in the sum of HK$5,000 per month. In addition the husband has offered to pay for the children’s medical and dental expenses. Thus the husband will be obliged to pay at least an additional HK$48,700 per month without taking into account any medical or dental costs.

36.  The husband has proposed that the children’s extra tuition fees, after school activities and school camps etc should be agreed to between the parties in advance and that he should then contribute towards those expenses upon production of the relevant receipts. I accept that this would be appropriate notwithstanding the high level of conflict between the parties. Thus the sum of HK$19,000 shall be deducted from the maintenance figure of HK$111,000 being the cost to the husband of the extra tuition fees, after school activities and school camp. I will hold the husband to his proposal as set out in his letter of the 16 May 2011, that upon discussion and agreement he will contribute 70% of the cost for the extra tuition fees, after school activities and school camps upon production of receipts. This is to be done within 14 days.    

Order with respect to the children

37.  Consequently I will make an order that upon the husband undertaking to continue to pay for:

a) the children’s school fees,

b) up to HK$7,000 per month for the American Club fees and chits,

c) maintenance of the Phuket property,

d) the children’s medical and dental expenses,

e) the fees for the children’s therapy up to HK$10,000 per month and

f) 70% of the children’s extra tuition fees, extracurricular activities and school camps, within 14 days upon production of receipts for the same,

the husband shall pay the wife interim maintenance for the two children of the family in the sum of HK$46,000 per month per child with effect from the 1 December 2011 until further order.

How much should the husband pay to the wife as maintenance pending suit for herself, if anything at all?

38.  I have considered whether or not I should make any order for the wife given that she is earning a good salary herself. On her figures the maintenance order for the children will mean that she is contributing c  HK$47,500 towards the children’s expenses plus her contribution to the extracurricular expenses etc. In addition she has to contribute towards her share of the general expenses and her own expenses. I accept that both parties should pay for the children’s flights when they are in their care. All in all it seems to me that she will be able to support herself without any assistance from the husband and have funds in excess, although I accept that in part this will be dependent on her actual tax obligation. Likewise the husband should have sufficient funds to maintain himself appropriately. I am conscious of the fact that his new partner should also be contributing towards his household expenses. I am satisfied that generally speaking the maintenance order is well within the husband’s ability to pay.

39.  I would add that this amount is also, by strange coincidence, almost identical to the amount paid by the husband prior to the 1 June 2011.

Should those maintenance payments be backdated and if so to what date?

40.  The wife asks that the maintenance be backdated. I accept that this would be appropriate given that the husband reduced payment without prior agreement with her. I will therefore make an order that the maintenance order be backdated to the 1 June 2011, which is when the husband said that the new arrangement was to come into effect, due credit to be given for all payments made by the husband in the intervening 6 month period.     

Should any provision be made for the wife’s legal costs?

41.  The wife also asks for HK$50,000 per month as a contribution towards her litigation costs.

42.  As has recently been confirmed by the Court of Appeal and as set out above, the Family Court in Hong Kong has continued to rely on the guidance provided by the English Court of Appeal case, Currey v Currey when determining the issue of litigation funding. The test to be applied is 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 should then be an overarching enquiry into the circumstances surrounding the request.

43.  On the wife’s evidence it seems that although there are properties in the Philippines, the US and in Phuket, that it may not be easy to use these to fund the litigation or alternatively to use them as security for borrowings. The property in the US for example is held on trust and other properties are jointly held. I also accept that she would in all probability not be able to rely on the third limb and legal aid would clearly not be available to her.

Overarching enquiry and costs

44.  But notwithstanding that I am aware when looking at this overall that the wife has in the main been able to fund her litigation to date by relying on her own income. A quick look at her credit cards reveals regular payments to lawyers. Given that she is in receipt of a good salary and a discretionary bonus, which has not been taken into account when determining the level of maintenance to be paid, plus the fact that she will now continue to receive a significant contribution towards the children’s maintenance it seems to me that this is not a case for awarding litigation costs.

45.  I am also concerned at the level of costs to date and the unfortunate way in which the wife has chosen to conduct some aspects of these proceedings. Aggressive and aggravated proceedings are to be discouraged – especially when children are unfortunately caught in the middle. As the Hon Hartmann LJ has pointed out above when considering whether to award litigation costs the reasonableness of the applicant’s stance will be relevant. Unfortunately I do not believe that the wife has always been reasonable. It was not reasonable for example to issue divorce proceedings based on unreasonable behaviour notwithstanding the fact that the parties had already been separated for a year. Neither was it reasonable to choose not to proceed with that petition when costs had already been expended and the marriage was clearly at an end. The wife’s approach to the arrangements for the children has also been a cause for some considerable concern.

46.  It also seems that the wife has simply asked for legal costs quite generally. She has not provided very much detail in support of her application. This approach was quite properly, in my view, criticized in HJFG v KCY. An update on costs has been provided at my request. This estimated the wife’s costs to date at just under HK$750,000 and the husband’s at c HK$470,000. One wonders how much of this could have been saved had a less emotive and more pragmatic approach been taken to the litigation. The wife sought in general terms for assistance to continue with her litigation, when the way in which she has chosen to do so to date, is a cause for some concern. Going forward the wife estimates that she will need HK$750,000 for an ancillary relief trial and HK$620,000 to pursue her removal application. The husband’s estimates for the relocation trial are HK$560,000 and a further HK$194,000 for the ancillary relief proceedings as at the end of the FDR hearing. He says that it will cost a further HK$511,000 for an ancillary relief trial.

47.  The husband offers to make payment of HK$250,000 to the wife to be applied to her ongoing legal costs, such sum to be taken into account in the final division of capital assets. I will hold the husband to this offer, save that I do not think it appropriate for it to be specifically taken into account in the final division of assets [Again see HJFG v KCY]. In the event that the husband has difficulty with this I will make an order that the husband do pay the wife maintenance pending suit for herself in the sum of HK$50,000 per month for the next 5 months with effect from the 1 December 2011, for litigation funding on the wife’s express undertaking that this sum is to be paid directly to her lawyers. The same condition shall apply if the husband chooses to advance the sum of HK$250,000 to the wife. I would hope that in part that the wife will use these funds wisely and consider her options for settlement. In any event if settlement is not possible, HK$250,000 will go some way towards covering the cost of the removal application, whereupon the issue of litigation funding may be looked at again.     

Costs of the application

48.  The wife issued her application for maintenance pending suit following the husband’s unilateral reduction of her maintenance. She sought a greater sum than I have ultimately awarded. However she has been successful in part. She has not however won her application for litigation funding. I have simply endorsed the husband’s offer – although not his request that the monies be off set against any award eventually received by the wife in the ancillary relief proceedings. In the circumstances I will therefore make an order nisi to be made absolute in 14 days time that the husband do pay half of the wife’s party and party costs of her application for maintenance pending suit/interim maintenance and litigation funding. There shall be certificate for counsel.

How should the issue of costs in relation to the first petition be determined? 

49.  As I have said I have some concerns about the way in which the wife has chosen to conduct certain aspects of this litigation. This is largely set out above. Solicitors for the husband have made the comment in their written submission on costs that her conduct in the divorce suit has been less than desirable. I agree. They ask for the husband’s costs of and occasioned by his summons of the 7 December 2011 in which he sought to dismiss the wife’s petition and the transfer all pleadings to the new proceedings issued by himself. The wife asks that there be no order as to costs. I have some sympathy with the husband in this respect. I am also conscious of the fact however that the husband chose initially at least to defend the wife’s petition. In all of the circumstances therefore I will make an order that the wife do pay half of the husband’s costs of and occasioned by his summons dated the 7 September 2011, on a party and party basis to be taxed if not agreed.