LPYT v. STFD

FCMC7424/2019

[2019]HKFC227

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 7424 OF 2019

-----------------------------------

BETWEEN

-----------------------------------

-----------------------------------

J U D G M E N T
(Maintenance Pending Suit)

-----------------------------------

Background

1.  The parties were married in 2009 in Hong Kong.  The child of the family (the ‘son’), a boy now aged 5, was born in 2014.  The petitioner wife (‘W’) petitioned for divorce on behaviour under FCMC 6091/2008 on 18 May 2018.  On 21 December 2018, upon the respondent husband (‘H’)’s undertaking to pay the son’s school fees of about $8,000 per month, it is ordered that H do pay W interim-interim maintenance in the sum of $50,000 per month, the 1^st payment to be made on 5 January 2019.  By the summons dated 11 January 2019, W made an application for maintenance pending suit (‘MPS’) for herself and interim child maintenance at such rates as the court deems fit.  In the supporting affirmation filed together with the said summons, W requested $62,000 per month as MPS for herself, $30,000 per month for the son and $30,000 per month for legal costs provision, totally $122,000 per month. 

2.  By the order dated 31 May 2019 and by consent, joint custody of the son was granted to the parties, with care and control to W and reasonable access including staying access to H.  Pursuant to the court order dated 31 May 2019 and by consent, W issued a fresh petitioner under these proceedings on one-year consent.  The Decree Nisi was pronounced on 3 September 2019.

3.  This is the hearing of W’s application by the summons dated 11 January 2019.  While H opposed W’s present application, he offered to continue the interim-interim MPS of $50,000 per month until the determination of the ancillary relief proceedings.

The Applicable Principles

4.  W’s application is governed by section 3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192. 

5.  The court has a wide discretion in the matter, subject to the result being reasonable: TL v ML & Ors (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263 per Deputy High Court Judge Mostyn QC (as he then was) at 1289:

“The sole criterion to be applied in determining the application is ‘reasonableness’ (s. 22 of the Matrimonial Causes Act 1973), which, to my mind, is synonymous with ‘fairness’.”

6.  Rayden[1] at §16.17 - 16.18 provides:

“The court has an unfettered discretion to award such sum as it thinks reasonable. There is no hard and fast rule, and no fixed proportion: each case depends on its own facts. It has been said that the approach to maintenance pending suit should be empirical, and that in the ordinary sort of case the district judges who deal with these applications will have to take a broad view of means on the one hand and income on the other and come to a rough and ready conclusion, or to take a “broad brush approach”.  The overall consideration is the actual needs of the parties’ pending suit.”

“…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.”

7.  In HJFC v KCY  [2012] HKFLR 27, Hartman JA said at §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.

v. Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial”

W and the son’s reasonable needs

8.  W worked as an administrative officer and earned about $20,00 per month.  In about 2013 when she was expecting the son, she quitted work and became financially dependent on H.  W with the son moved out of the matrimonial home in May 2018.  At that time, she took away the sum of $1.75M from a company operated by H.  She used to receive $5,000 monthly salary from another company operated by H.  The said monthly payment of $5,000 was stopped after W left the matrimonial home.  W has been living on the said sum of $1.75M, and at present there is only about $200,000 left.  As claimed by W, she has borrowed from banks to meet her monthly expenses and legal fees.

9.  According to W, her monthly general expenses, personal expenses and child expenses are $45918, $43,356 and $8,850 respectively, totally $98,124.  H’s comment on the said expenses are as follows: -

General

	W $	H $
Rent	20,000	20,000
Utilities	1,100	1,100
Food	4,000	4,000
Household expenses	1,000	1,000
Car expenses	12,612	0
Domestic helper	6,000	6,000
Insurance	610	0
Others	596	300
	45,918	32,400

Personal

Meals out of home	5,000	3,000
Transportation	1,000	1,000
Clothing/ Shoes	4,000	2,000
Personal grooming	3,000	1,000
Entertainment/ presents	2,000	1,500
Holidays	5,000	1,500
Medical/ Dental	500	500
Insurance premia	3,000	0
Loan repayment	18,756	0
Others	1,100	1,100
	43,356	11,600

Children

8,850

7,000

10.  H argued that W’s general expenses and personal expenses of $45,918 and $43,356 respectively are excessive.  Apart from the argument that many items of W’s personal expenses were inflated, he also raised the argument that there was no need for W’s purchase of a brand new BMW, and having taken notice that largely speaking the monthly repayment of $18,756 under W’s personal expenses was arisen from W’s credit card payment for the down payment of the BMW, he argued that the said monthly repayment of $18,756 per month and furthermore the car expense of $12,612 per month under general expenses should be disallowed.  Despite that it seems indisputable to me that the parties lived a comfort living standard during the marriage, I take the view that the parties however might have to face the reality that once the divorce process has started, the parties’ standard of living might drop and with good reasons.  Many factors combine to lower the parties’ standard of living after divorce.  Expenses will begin to mushroom as soon as the divorce process starts, for example legal fees, new living expenses and myriad other costs will drain their financial resources.  Money previously used to support one household must now stretch to support two.  After having carefully considered, I accept H’s argument that W did not (and does not) need a car.  Given the above and the fact not only that W had $1.75M in May 2018, but she was paid interim-interim maintenance of $50,000 per month, I take the view that in fact W did not need the claimed borrowings. I accept that the said monthly car expenses of $12,612 and also the monthly loan repayment of $18,756 should be disallowed.  After having carefully considered, I assess W’s general expenses at $45,918 - 12,612 = 33,306 per month.  I have regarded that W should consider cutting down on her personal expenses.  For the purpose of the present application, I assess W’s personal expenses at $11,600 per month as per H’s suggestions.  To keep the son’s current standard of living, I allow the son’s expenses as claimed by W.  In summary, I assess the immediate and reasonable needs of W in the sum of $53,756 per month, the breakdown of which is set out as follows: $33,306 + 11,600 + 8,850 = 53,756.

11.  In view of that W, aged 35, healthy, has a university degree in BBA and working experience, H argued that W has the ability to work. In reply, it is submitted that, having left the labour market since 2013, she has difficulty in getting a meaningful employment.  It is also said on her behalf that she prefers to spend full time on taking care of the son taking into consideration his young age and the fact that the family is going through a very difficult time.  For the purpose of the present application, I accept that having been a home maker for years, apparently W has lost her touch with the business world and further regard that it is unrealistic to expect her to immediately return to a gainful employment, despite that I am open to the argument that W should work in the longer term.  I am leaving the question of W’s earning capacity to the substantive hearing of the ancillary relief matter.

H’s ability to pay

12.  H is carrying on the business of overseas education consultancy.  For the purpose of the present application, W accepts that H does not have any asset that can be used to meet MPS payment.  Although according to his Form E dated 14 November 2018, H had two sources of income: a monthly salary of $63,000 and consultancy service fees from various sources amounting to $150,000 per month, in his affirmation dated 1 March 2019, he affirmed that his ‘consultancy service fees’ income was only $45,000 per month instead of $150,000 per month.  It is W’s case that H has (a) basic salary $63,000 per month; (b) ‘consultancy service fees’ of $150,000 per month; and (c) commission earned from direct dealings with students that W estimates to be of around $140,000 per month.  W is incredulous to H’s new evidence, perhaps rightly so.  I place particular attention on the fact that H’s Form E was filed by H’s former solicitors.  As such, I find it very difficult to accept on papers H’s new evidence that he mistakenly affirmed his ‘consultancy service fees’ in his Form E as he said he did.  I take the view that it will be most unusual if he will make such mistake when he is legally represented.  What is more, as W remarked, the living standard of the parties during the marriage suggests that H’s ability to pay was much more than $108,000 per month.  For example, H used to own four vehicles.  It is also noteworthy that as stated by him, his current general expenses, personal expenses and children expenses are $25,740, 157,172 and 6,100 per month respectively, totally $189,012, and his legal expenses are $24,000 per month.  The rhetorical question to ask is how will he be able to keep up his current monthly expenses, if he earns only $108,000 or $80,000 per month?  All in all, I regard that H’s income of consultancy service fees is $150,000 per month for the purpose of this application.  Counsel for W went to great length to try to convince the court that on top of the above H has commission income from direct dealings with students of around $140,000 per month.  Looking at the matter in the round, I have the lurking suspicion that generally speaking W’s alleged commission income overlaps the consultancy service fees above.  I am leaving that matter to be determined at the substantive hearing of the ancillary relief matter.  For the purpose of the present application, I regard that H’s income is $63,000 + 150,000 + 213,000 per month.

13.  According to H, his current general expenses, personal expenses and children expenses are $25,740, 157,172 and 6,100 per month respectively, totally $189,012.  W’s comment on the said expenses are as follows: -

General

	W $	H $
	25,740	23,740

Personal

Meals out of home	15,000	5,000
Transportation	3,000	1,000
Clothing/ Shoes	3,000	3,000
Personal grooming	1,500	1,500
Entertainment/ presents	10,000	2,000
Holidays	10,000	5,000
Medical/ Dental	1,000	10,00
Tax	11,172	11,172
Insurance premia	10,000	10,000
Interim-interim maintenance	50,000	37,000
Dependent family members (parents)	15,000	0
Loan repayment	27,500	0
	157,172	76,672

Children

6,100

2,300

14.  About H’s monthly expenses, I do not intend to go for a detailed forensic examination of each and every expense.  Taking a broad brush approach, I allow H’s general expenses of $25,740 per month.  About his personal expenses, I regard that for the purpose of the present application it is fair to assume that the parties should have similar standard of living and on a broad brush basis I assess H’s personal expenses at the same of W’s, i.e. $11,600 per month, exclusive of MPS payment, plus tax payment of $11,172 per month.  Taking the same approach towards W’s children expenses, I allow H’s children expenses as claimed by him.  Additionally, H has legal expenses of $24,000 per month.  That is to say, I assess H’s immediate and reasonable needs at $25,740 + 11,600 + 11,172 + 6,100 + 24,000 = 78,612, exclusive of MPS payment.  Seeing no reason why H needed to go into debts, inasmuch as H’s income was enough to meet his reasonable monthly expenses, I do not take into account H’s claimed monthly loan repayment in the calculation of his personal expenses.

15.  I take notice that H has the ability to pay W’s immediate and reasonable needs of $53,756 per month as MPS.

16.  Having carefully considered all circumstances, I do not propose to back-date the MPS payment. 

Legal costs provision

17.  The relevant legal principles have been recently reviewed by B Chu J in LCYP V JEK [2018] HKCFI 1907: -

‘26. The Court's power to order MPS (including element for legal costs provision) is stated in section 3 of the Matrimonial Proceedings and Property Ordinance, Cap 192. The sole criterion stipulated by that section is "reasonableness", which has been said to be synonymous with "fairness".

27. Wilson LJ had said in Currey v Currey (No 2) [2007] 1 FLR 946 :-

"In my view the initial, overarching inquiry is 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. Furthermore, not to forget the third of Thorpe LJ's three features, she has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery. I would add, fourthly, that the court needs also to be satisfied that there is no such public funding available to the applicant as would furnish her with legal advice and representation at a level of expertise apt to the proceedings, i.e. that the applicant does indeed in that regard fall within the unserved constituency…"

28. In short, the overarching inquiry is into whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means and that:

• (i) 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.

• (ii) She has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery;

• (iii) The court needs also to be satisfied that there is no such public funding available to the applicant as would furnish him/her with legal advice and representation at a level of expertise apt to the proceedings.

29. What was said by Wilson LJ in Currey was endorsed by Cheung JA and Hartman JA in HJFG v KCY [2012] 1 HKLRD 95 who held that the Currey principles should in future be adopted as providing prudent guidance to both judges and practitioners in this jurisdiction.

30. Mr Yim had also referred the Court to the English case of A v A (Maintenance Pending Suit: Payment of Legal Fees) [2001] 1 WLR 605, in which the wife who was dependent upon the husband applied for an order for maintenance which includes provision for legal costs. Holman J had stated as follows:-

"But Mr Singleton submits that the costs of the suit itself are in a different category. I do not agree. Just at the moment they are, after the provision of a roof over her head and food in her mouth, the wife's most urgent and pressing need and expense. She could manage without holidays, though I have made some provision for them. She could no doubt manage for a while without buying new clothes. She could manage for a while without buying new clothes. She could manage without her manicures, pedicures and yoga and keep fit classes, for all of which I have, on the facts of this case, made provision. She could even manage without the provision for forms of private medical care (to which the family has been accustomed) for, if necessary, she could fall back on the NHS. But she simply cannot make any progress with the dominating issue in her life if she cannot pay her lawyers, and for this the state will not provide ." (emphasis added)

31. As to why legal costs provision is particularly crucial in cases where there is a great disparity in wealth and earning capacity as a consequence of the marriage, Holman J had this to say:-

"This wife has always been dependent on her husband. She is locked into a bitter struggle with him, whose outcome is of intense importance to her. She has an acute need for good legal representation and in circumstances in which her lawyers do not lawyers have to be desperately economizing relative to the husband. He himself is spending huge sums on the litigation. He can, in my judgment, afford to pay the sums I have ordered and it is reasonable that I should require him to do so."

He then went on to say:

"In my judgment, in an appropriate case, maintenance pending suit provides a partial answer and, for the reasons I have now given, I made the order in the present case. I add that, since I made the order, the House of Lords has given its judgment in White v White [2000] 3 WLR 1571. That did not, of course, impact at all on my decision which I had reached and announced several days earlier, not on my reasons for it. However, Lord Nicholls of Birkenhead stressed, in relation to the substantive outcome, that there is to be no place for discrimination between husband and wife and their respective roles. In my view, that substantive approach may be illusory if a wife is unable to vindicate it due to the difference in their roles, and its discriminatory effect upon their income and capital and upon a wife's ability to match the legal representation of her husband. The changing climate for the outcome of matrimonial litigation, which the House of Lords has clearly heralded, further fortifies me in my view as to financing its interlocutory stages." ’

18.  I also take notice that in KGL v CKY [2003] 2 HKLRD 301,  Woo JA at 307 stated: -

“There is no reason why public funds should be expended to fund litigation when there are ample resources available within family funds.”

19.  As set out in the part 2 of her Form H, W calculated that her costs for the ancillary relief proceedings after the current hearing up to and including the FDR are $381,000.  Assuming that the FDR would take place in about 12 months, she estimated that she needs $30,000 per month.  H argued that having no income, W was within the financial eligibility limits for legal aid, that there was no reason why W did not exhaust the alternative of applying for legal aid and that she failed to bring herself within the Currey test.  In contrast, W contended that receiving the interim-interim maintenance in $50,000 per month, W would not pass the means test.  It is regrettable that the parties are unable to show any evidence as to whether interim-interim maintenance payment is regarded as income for the purpose of legal application.  Nonetheless, I have taken the view that H has monthly income of $213,000 that is sufficient to meet both parties’ immediate reasonable needs as well as W’s need for litigation funding in the sum of $30,000 per month.  Considering that there are adequate resources available in the family and applying Woo JA’s remarks in KGL V CKY above, I regard that W is entitled to draw from the resources available within the family for the purpose of legal costs provision.

20.  I am aware that the issue on the parties’ respective financial positions remains a continuing source of disputes that will be sorted out at the substantive hearing.  Any under provision or over provision in the MPS order may be set off at the end of the day if it is fair and just so to do.

Disposal

21.  In conclusion, it is ordered that: -

(1) H do pay W $53,756 per month as MPS, the 1^st payment to be made on 5 October 2019 and subsequent payments on the 5^th day of each succeeding month until further order;

(2) H do pay W $30,000 per month for 12 months as legal costs provision, the 1^st payment to be made on 5 October 2019 and subsequent payments on the 5^th day of each succeeding month.

22.  Since broad brush approach is adopted and in view of the parties’ arguments on their respective financial positions are yet to be determined, I would make an order nisi that costs of by this application be reserved.  The order nisi becomes absolute 14 days after this order is made unless a party has applied to the court for varying the order.