LYYC v. CHL and CSMS, the Executrices of the Estate of CGSK also known as CSKG, deceased

FCMP 223/2017

[2020] HKFC 215

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FAMILY COURT

MISCELLANEOUS PROCEEDINGS

NUMBER 223 OF 2017

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J U D G M E N T

(Interim financial support, including litigation funding, in the context of an
application made under the Inheritance (Provision for Family and Dependants) Ordinance, Cap 481)

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Introduction

1.  This is an application by an Applicant, who is allegedly the former Mistress and employee of the Deceased. The Applicant, has issued two summonses, the first Originating Summons dated the 1 November 2017 seeks the following relief:

1.   an order that such reasonable financial provision as this Honourable Court thinks fit for such period and for such sum(s) (including lump sum or periodical payment) be made for the Applicant out of the net estate of the Deceased (“the said estate”) pursuant to sections 3 and 4 of the Inheritance (Provisions for Family and Dependents) Ordinance (Cap. 481);

2.   Such further or other relief as shall be just; and

3.   Costs of this application be paid out of the said estate.

2.  On the 19 November 2019 the Applicant also issued a second summons in which she sought the following additional relief:

1.   The Estate of the Deceased do pay the Applicant interim maintenance payment in an amount as this Honourable Court deems fit pending the final determination of the Originating Summons filed on 2 November 2017 or until further Order; and

2.   Costs of and incidental to this application be provided for.

In her affidavit evidence it is made clear that the Applicant is seeking both interim financial support for herself and litigation funding, pending final determination of the summons in paragraph 1 above.

Brief background to the current litigation

3.  This dispute has a long history and I do not intend to set it out in any detail here. In summary however, it concerns the Deceased and his relationships with his wife and first family, his Mistress S and his second family and, on the Applicant’s case, his relationship with her and his financial support of her family. It is also not disputed that the Deceased had several long term relationships with other women.

4.  By all accounts the Deceased was a very successful and highly regarded business man. The Respondents are his first wife and his daughter by his first marriage, CSMS (or S for short). S has filed all of the sworn evidence in these proceedings, for and on behalf of both herself and her mother, as executrices of the estate. In her first affirmation dated the 15 January 2018 she says this of her father:

B1. C. G. and his family

12.   C.G. was born on XX June 1940. He graduated from the University of X, England in 1966 with a bachelor’s degree in civil engineering and was then engaged in the shipping industry for over 40 years.

13.   C.G. joined the WKSH Limited group of companies (the “Group”) (being the C family business started by his father) in 1966, was appointed as a director of the group holding company, WKSH in 1972 and was the Chairman of WKSH for many years. He was also the chairman of the Ship Insurance & Liability committee of A Forum, the chairman of the B Association from 1996 to 1997, the chairman of the C Committee of Hong Kong, the chairman of the D Training Board, a council member of the E Training Council of the Hong Kong government and advisor to the Hong Kong F Centre. He was appointed by the Government of the PRC to negotiate the protocols of Hong Kong and Taiwanese ships entering the respective ports in each other’s territory in advance of the establishment of the Hong Kong SAR in 19XX, and in November 20XX, his achievements and contributions over four decades were recognised by the industry with the award to him of the G Achievement Award.

14.   C.G. was married to L for over 40 years. They had four children, myself (born XX/5/1974), my sister CSHJ (born XX/4/1976) (“J”) my sister, CSPJ (also born XX/4/1976) (“JW”) and my brother, CSHF (born XX/3/1978) (“H”).

15.   C.G. also had two children with Miss SLC (“Mistress S”) born out of wedlock. They are CSHJ (born XX/6/1989) (“HY”) and CSCA (born XX/7/1992) (“A”).

16.   I have been employed by the WKSH Group since 2002 working closely with C.G. Since around January 2013, I have been the managing director of WKSH.

5.  The Deceased had his first stroke in September 2004 but was still able to function, although he was left with some physical impairment. On the 12 September 2005 the Deceased made a Will in which he left his estate to his wife (50%), S (20%) and his remaining legitimate children 10% each. On the 20 September 2006 the Deceased made the 1^st Codicil which stated inter alia as follows:

1.   I GIVE to SGI LIMITED, a limited company incorporated under the laws of Hong Kong and having its registered office situate at … Hong Kong (“SG”) the sum of HK$5,000,000 or the sum equivalent to the balance of the mortgage 1oan due from SG to Bank of Communications (“the Bank”) as at the date of my death as secured by the mortgage of the property at … Happy Valley, Hong Kong, whichever is the lesser amount.

2.   I hereby DECLARE that all or any sums or sum of money which I have already paid and may hereafter pay to SG or to the Bank for and on behalf of SG as mortgage instalments were or are gifts from me to SG.

3.   My Trustees shall pay the sum of HK$50,000 per month to [Mistress S] of …. Kowloon, Hong Kong during her life provided that the total payment thereof shall not exceed HK$6,000,000.00.

4.   In all other respects, I HEREBY CONFIRM my said Will dated 12th September, 2005 as modified by this Codicil.

SG was the corporate vehicle which held the Applicant’s property, that had been purchased for her by the Deceased. The gift referred to above meant that she should, all things being equal, retain this property mortgage free after his death.

6.  On the 7 July 2009 the Deceased entered into a 2^nd Codicil which stated as follows:

1.   I GIVE all the shares in AC Inc., a corporation incorporated in the Republic of Liberia, standing in my name or to which I am entitled or which I possess at my death together with all dividends, bonus issues, privileges, benefits and advantages on account of such shares already accrued due or accruing at my death to SG, a limited company incorporated under the laws of Hong Kong and having its registered office situate at …, Happy Valley, Hong Kong absolutely.

2.   I DECLARE that if at my death my shares in the said AC, shall be represented by different capital holdings as a result of any takeover amalgamation or reconstruction then the gift under Clause 1 above shall take effect as a gift of those different capital holdings.

3.   In all other respects, I HEREBY CONFIRM my said Will dated 12th September, 2005 as modified by the First Codicil dated 20th September 2006 and this Second Codicil.

Thus, it seems clear that it was originally the intention of the Deceased to make a further gift to the Applicant, via the same corporate vehicle as before, namely SG.

7.  In or about December 2010 the Deceased had a second and far more serious stroke that left him completely incapacitated. From that time onwards the Deceased was unable to manage his own affairs. Approximately two years thereafter, on the XX November 2012, a Committee was appointed under the Mental Health Ordinance, Cap 136 to take care of the Deceased’s affairs. S was the Chairperson of that Committee.

8.  On the 27 February 2014 the Applicant issued proceedings under the Mental Health Ordinance. I am told that the issues that are presently at play in these proceedings were also central to those proceedings. A trial was held in November 2015, but unfortunately the Deceased dies on the 20 July 2016, before a judgment in the Mental Health proceedings could be handed down.

9.  There were also some other issues with respect to the grant of probate which led to the Applicant issuing a further Writ in the High Court in November 2016. As I understand it the Applicant was concerned that the Executors might not proceed with the application for the grant of probate in a timely manner. In any event, the Applicant eventually agreed to withdraw this application on the undertaking of the Executrices to apply for the said grant. Consequently, the grant of probate was issued on the 20 June 2017.

10.  The focus of the dispute then shifted and shortly thereafter, on the 1 November 2017, the Applicant issued the Originating Summons as set out in paragraph 1 above.

The proceedings in the Family Court to date

11.  On the 26 February 2018 the Respondent’s applied to strike out the Originating Summons. On the 8 January 2019 this court handed down a judgment dismissing that application.  In so doing, the court identified what appeared then to be the main legal issues, as follows:

Discussion

9.   It is the Respondent’s case that the Applicant has no locus standi, as they argue that on the undisputed evidence before the court, that she was not a person who was being maintained by the deceased either wholly or substantially before his death. This is not accepted by the Applicant. It is her case that she was and has continued to be maintained by the deceased. There is also a related argument concerning the nature of the Applicant’s relationship with CGSK and whether or not the money she received from him was in the nature of a salary or whether she was being “maintained” by him. It is the Applicant’s case that she had an ongoing and intimate relationship with CGSK. This is not accepted by the Respondents. Given that this is a factual dispute, it is clearly not appropriate for the court to come to a decision simply based on the affidavit evidence currently before it. Further I accept that it is not for me to take a “view” on the affidavit evidence filed to date.

10.   There are also other arguments with respect to the law and in particular whether the phrase “immediately before his death” should be construed widely or narrowly.

12.  The Respondents sought to appeal this judgment, first seeking leave to appeal from this court in January 2019, which was dismissed and then seeking leave to appeal from the Court of Appeal itself. On the 14 May 2019 the Court of Appeal also dismissed the Respondent’s application. They summarized the issues before the court in the following terms:

16.   It is the Applicant’s case that, since the early to mid-1990’s, the Applicant and the Deceased developed a romantic relationship, and the Deceased had financially supported her and her family since then. The Respondents deny that. They say that the relationship between the Applicant and the Deceased was purely professional. The payments received by the Applicant throughout the years were payments in return of her services rendered under her employment. According to the Respondents, given the salary from her employment and the financial support of her eldest daughter, the Applicant cannot be said to be either wholly or substantially maintained by the Deceased.

17.   Clearly, there are factual disputes that cannot be resolved by affidavit evidence alone.

18.   The Deceased was unable to make payment to the Applicant since December 2010 after he suffered his second stroke. He was bedridden and could not speak or write. A Committee in respect of his estate was appointed in November 2012. After such appointment, monthly payment was made by PF Company Limited [“PFCL”] to the Applicant for the period from January 2011 to September 2013. The Respondents say that the payment was made in return of the Applicant’s services on the instructions of the Committee.

19.   It is argued that, due to the discontinuity of payments from the Deceased, the Applicant was not “maintained by the deceased immediately before his death”.

20.   On the other hand, quite apart from the monthly payments made to her by PFCL, the Applicant relied on the following provisions given to her by the Deceased as her means of support up to the demise of the latter,

(a)  A lump sum of $5 million paid to her in 2010 originally intended as a bridging financial relief between the death of the Deceased and the grant of probate;

(b)  The payment (including mortgage payments and provisions in a codicil of the Deceased for a payment to discharge the outstanding mortgage for that property) for a residential property in Happy Valley held by SG (in which the Applicant is 98% shareholder with her two daughters each holding 1 %). The property was and still is the residence of the Applicant.

21.   According to the Respondent, the mortgage of the Happy Valley property had been fully paid off by the Committee in June 2015.

22.   As the Judge pointed out in [10] of the Striking Out Decision, there is a dispute on the law as to whether the phrase “immediately before his death” should be construed widely or narrowly. Counsel for both parties have referred to various English cases including Jelley v Iliffe [1981] Fam 128 and Re Beaumont (deceased) [1980] 1 All ER 266.

23.   We do not think that the determination of the question whether the Applicant comes within section 3(1)(ix) is a pure question of law that can be resolved in the abstract. In light of the history of the relationship between the Applicant and the deceased and the alleged provisions given to her, it is at least arguable that one should not simply single out the fact that she received nothing more since 2013 to rule her out as a potential candidate under section 3(1)(ix) of the Ordinance. The Judge was correct in holding that this question should be dealt with at trial.

24.   Counsel for the Respondent relied on the judgment of Lewison J in Baynes v Hedger [2008] EWHC 1587 at [154]. The proposition seems to be that a contribution is made when the gift was made. In the present context, the Respondent contended that those gifts by the Deceased were made in 2010 (the $5 million) and at the latest in June 2015 (when the mortgage payment for the Happy Valley property was paid off).

25.   We accept that it is a respectable argument but we do not think it is appropriate to determine if the approach of Lewison J is too narrow in the context of a striking out application.

13.  It is then against this background that the Applicant now seeks interim financial support including litigation funding. It follows therefore that the court cannot and should not make any definitive findings, again on affidavit evidence only, with respect to the central issues in dispute – namely whether or not the Applicant received maintenance from the Deceased (on her case HK$70,000 per month as at the date of his second stroke, plus the lump sum of HK$5 million) and other gifts including inter alia HK$500,000 per annum and her flat etc, or whether, from a legal perspective, the phrase “immediately before his death” should be construed widely or narrowly. These are issues that can only be dealt with at trial, in the event that common sense does not intervene in the meantime and a settlement is not reached.           

The central issue

14.  At this stage then, the central issue is a) whether or not interim financial provision should be made for the Applicant out of the estate, to include litigation funding and b) if so how much should be paid and on what terms?     

The law

15.  The law is straightforward and not in dispute. Section 3(1) (ix) states as follows:

3. Application for financial provision from deceased’s estate

(1) Where after the commencement of this Ordinance a person dies—

(a) domiciled in Hong Kong; or

(b) having been ordinarily resident in Hong Kong at any time in the 3 years immediately preceding his death,

and is survived by any of the following persons—

…

(ix)  any person (not being a person included in the foregoing paragraphs of this subsection) who immediately before the death of the deceased was being maintained, either wholly or substantially, by the deceased,

that person may apply to the court for an order under section 4 on the ground that the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant.

16.  Section 7 of the Inheritance (Provision for Family and Dependants) Ordinance, Cap 481 also states as follows:

7. Interim orders

(1) Where on an application for an order under section 4 it appears to the court -

(a) that the applicant is in immediate need of financial assistance, but it is not yet possible to determine what order (if any) should be made under that section; and

(b) that property forming part of the net estate of the deceased is or can be made available to meet the need of the applicant,

the court may order that, subject to such conditions or restrictions, if any, as the court may impose and to any further order of the court, there shall be paid to the applicant out of the net estate of the deceased such sum or sums and (if more than one) at such intervals as the court thinks reasonable; and the court may order that, subject to this Ordinance, such payments are to be made until such date as the court may specify, not being later than the date on which the court either makes an order under section 4 or decides not to exercise its powers under that section.

(2) Subsections (2), (3) and (4) of section 4 shall apply in relation to an order under this section as they apply in relation to an order under that section.

(3) In determining what order, if any, should be made under this section the court shall, so far as the urgency of the case admits, have regard to the same matters as those to which the court is required to have regard under section 5.

(4) An order made under section 4 may provide that any sum paid to the applicant by virtue of this section shall be treated to such an extent and in such manner as may be provided by that order as having been paid on account of any payment provided for by that order.”

(emphasis added)

17.  Section 5 sets out the matters to be considered inter alia, for an interim order for reasonable financial provision:

5. Matters to which court is to have regard in exercising powers under section 4

(1) Where an application is made for an order under section 4, the court shall, in determining whether the disposition of the deceased's estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, have regard to the following matters-

(a)  the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(b)  the financial resources and financial needs which any other applicant for an order under section 4 has or is likely to have in the foreseeable future;

(c)  the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

(d)  any obligations and responsibilities which the deceased had towards any applicant for an order under section 4 or towards any beneficiary of the estate of the deceased;

(e)  the size and nature of the net estate of the deceased;

(f)  any physical or mental disability of any applicant for an order under section 4 or any beneficiary of the estate of the deceased;

(g)  any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.

…

Case law

18.  Reference has been made by counsel to a number of cases, although it would be fair to say that the factual matrix for each of them is very different from the current case. In ACLS v HSB(T)L 2013 2 HKLRD 444 (CA) it was held inter alia as follows:

Held, dismissing the appeal, that:

(1)  The proper construction of s.7 must have regard to the statutory scheme of the Ordinance as a whole. Under s.3, the primary objective was to make reasonable financial provision from the estate of the deceased to dependants who had no such provision under the deceased’s will or the law as to intestacy (or both). However, apart from a surviving spouse or tsip, an applicant’s reasonable needs must have been substantially provided for by the deceased immediately before the death. (See paras.22-26.)

(2)  Interim maintenance should only be granted (at a stage where a claimant’s actual entitlement had yet to be established) in a very clear case where the immediate need of financial assistance was shown. Since a claimant had no obligation to repay the estate (subject to conditions to such effect being imposed and claimant resources to meet such conditions), there was a real risk that the beneficiaries of the estate might suffer a detriment if the court ultimately held after trial the claimant was not entitled to any relief. Of the many factors at play in an application under the Ordinance, an important one was fairness amongst all the beneficiaries. Thus, the court could not consider only the reasonable need of a claimant and the resources available to the estate. (See paras.38-39.)

(3)  The requirement for “immediate need” under s.7(1)(a) meant something which called for immediate attention. It would not be right to equate “immediate” with “urgent” and it might be too simplistic to equate it with “current”.  While urgency could be a facet of immediate need, whether this was the case depended on the circumstances. Further, s.7(1)(a) was not satisfied by P showing a current liability to repay a substantial debt. First, the immediate need was that for financial assistance and if an applicant’s current financial need had been met by other sources (albeit by a debt to a relative), there was no immediate need. Second, depending on one’s usage of the expression, something could be current but not requiring immediate attention (M v M [2011] 1 FLR 1773 considered). (See paras.40-44.)

(4)  Accordingly, on the facts, the Judge was entitled to conclude that P was not in immediate need of financial assistance. On a fair reading of his judgment as a whole, his reference to “urgent financial needs” did not constitute an error of law which vitiated his decision. This case was one where urgency of the matter was a relevant factor in considering whether “immediate need” was established. (See para.48-52.)

Similar points have been made in Yip Wing Ching v Yip Shung Kin & anor [2020] HKC 180.

19.  In this instance however, whether or not the Deceased provided substantially for the Applicant’s reasonable needs immediately before his death, it still subject to debate and to further adjudication at trial. It is also of note that the court does not necessarily accept the suggestion that ultimately the Applicant has a weak case.

20.  By analogy, counsel for the Applicant also referred to the case of YS v TTWD (MPS) [2011] HKFLR 439. In that case there was an argument concerning the ability of the court to order maintenance pending suit when jurisdiction was in issue. Similarly, in this instance, as indicated above, there is an argument concerning the court’s ability to make an order for interim financial provision when the Respondents argue that the Applicant has no locus standi. It is argued that just as in the YS case the court can make such an order, but that it has to proceed with more caution than normal. This is accepted, especially given the fact that the legislation also allows for any payment to be subject to such conditions or restrictions as the court deems necessary in the circumstances.       

Each party’s case

The Applicant’s case

21.  The Applicant, who was born on the XX February 1961, summarized the relevant background, other than as set out above, in her fourth affirmation dated the 5 December 2019, as follows:

4.   I first started to work for … (“WKS”) in 1980, a company of the Deceased. From or around 1992, the relationship between the Deceased and I developed into a sexual relationship. We provided each other companionship and affection while the Deceased continued to support me financially. This lasted for over 20 years.

22.  In her earlier affirmations she had also explained that she had had two children with a partner, who subsequently died of heart disease. Her children were born on the XX September 1982 and the XX April 1986 and are now aged 38 and 34 years respectively. She continued

6.   Since 1992, the Deceased had been providing me maintenance payments starting from HK$25,000 and which was eventually increased to HK$70,000. I crave leave for this Honourable Court to refer to the exhibit marked “LYYC1-3” of my First Affirmation filed on 2 November 2017 which are copies of various cheques of the Deceased or PF Company Limited (“P Finance”), another company which the Deceased controlled, drawn in my favour.

7.   In addition to the financial support that the Deceased provided me above, the Deceased also provided me the following forms of financial support throughout the years:

a.   2003 - the Deceased arranged for me to have the use of a car. He also settled all the car’s expenses through P Finance. In 2013, PF granted me a loan for HK$280,000 to purchase a newer second hand car as the old one was wearing out. PF continued to settle the car's expenses up until September 2013.

b.   2005 - the Deceased bought a flat for me at … Happy Valley, Hong Kong (“the Flat”) for the consideration of HK$8,130,000. The Flat is registered in the name of SGI (“SG”), a corporate entity limited by shares that is currently 99% held and owned by me and 1% held by my younger daughter, FC. The funds for purchasing the Flat, including subsequent mortgage payments were all funded by the Deceased.

c.   2006 - when the Deceased executed his first codicil dated 20 September 2006 to his Will dated 12 September 2005, he told me he intended to provide me and [Mistress S] (with whom the Deceased had two children out of wedlock) HK$50,000 per month by way of life interest following his death. After discussion with the Deceased, he agreed instead to give me an annual sum of HK$500,000 during his lifetime. I have received a total of HK$1,500,000 for the period from 2007 to 2009. This payment has stopped since the Deceased had his second stroke in December 2010. The annual payment of HK$500,000 was separate and additional to the monthly support as mentioned above.

d.   2008 - when my Mother passed away in 2008, the Deceased gave me HK$350,000 to purchase connected columbarium for my parents in Shatin.

e.   2008 - the Deceased settled 95% of the HK$450,000, being the costs of my tooth implant. I had to settle the residual 5% in 2011 as the Deceased had his second stroke.

f.    2009 - the Deceased gave me the assets of PF and WK Engineering Limited (“WK Engineering”). The Deceased told me the two companies were worth approximately US$10miliion. This intention was given effect in the Deceased’s second codicil dated 7 July 2009 to the Deceased’s Will dated 12 September 2005 by which the Deceased gave all his shares in ACI. (“AC”) to SG. PF and WK Engineering are wholly-owned subsidiaries of AC. A valuable asset that WK Engineering once held but which has been sold by the Committee at the beginning of 2014 for the consideration of HK$53,000,000 was … Lippo Centre, 89 Queensway, Hong Kong (“the Lippo Centre Property”).

g.   2009 - the Deceased gave me HK$5 million and told me it was for temporary financial relief for the period after he passed away and before probate of his estate could be granted.

h.   Special occasions - the Deceased gave me monies to purchase presents on special occasions such as Christmas or my birthday, usually of the order of about HK$100,000 or more.

I crave leave to refer to the exhibits marked "LYYC1-4" and “LYYC1-5" of my First Affirmation filed on 2 November 2017 which are copies of various cheques of the Deceased or his companies drawn in my favour, copies of a cheque drawn by the Deceased being the residual purchase price of the Flat, various Credit Advices of Bank of Communications showing the Deceased or the Committee repaying the mortgage and various Customer’s Receipts of Wing Hang Bank Limited showing the Deceased repaying the mortgage.

8.   On 30 September 2013, my employment with WKS was terminated with immediate effect. Besides the mortgage payment of the Flat, the Committee has, since 30 September 2013, ceased paying me all of the above financial support that the Deceased had all along been providing me, although I did receive HK$456,540 being my severance and long service payments from WKS.

9.   Shortly after the termination of my employment with WK, the Committee’s Solicitors proposed, in their letter dated 7 October 2013, that I should enter into a Deed of Arrangement in which I would give up any rights which I may have, in return for certain payments. Amongst other clauses is a monthly payment to me of HK$70,000 under a suggested consultancy agreement to be entered into between me and P Finance. I crave leave to refer to the exhibit marked “LYYC1-10” of my First Affirmation filed on 2 November 2017, the said letter dated 7 October 2013 and the draft Deed of Arrangement.

10.  What the Committee proposed fell far short of what I was receiving from the Deceased until he had his second stroke in December 2010. It is simply unfair, onerous and ridiculous for the Committee to require me to enter into a nebulous and insecure consultancy agreement in order for me to receive any payment when I have never previously been under any such obligation. I did not enter into the said consultancy agreement as requested. That offer was in any event withdrawn by the letter dated 27 February 2014 from the Committee's Solicitors. There is now produced and shown to me marked “LYYC4-1” is a copy of the said letter.

11.  As matters now stand and in fact since October 2013, I have not received any further financial support from the then Committee, the Estate or otherwise.

23.  The Applicant says that she is now in a precarious financial position. Although she effectively owns the Happy Valley flat, she has had to remortgage it (in January 2017) and has moved out in order that it may be rented in the interim. She says that it is her intention to move back into it and that she has no intention of selling the flat, although it is recognised that there may be no alternative if she is ultimately not successful in this litigation. She has access to no other funds save for very limited savings. She has spent the HK$5 million that she says the Deceased gave to her in order to ensure that she had sufficient funds before the grant of probate. She has borrowed from her son-in-law and says that she no ability to borrow further monies from him, or others or indeed from any other professional lenders. I accept that this is likely, given that she is now aged 59 years old and is not currently working and has not done so since 2013.

24.  The Applicant now seeks HK$149,510 per month (rounded up to say HK$150,000 per month) as interim financial support. This includes HK$38,000 per month as litigation funding (although in the alternative she seeks just under HK$48,000 per month as set out in the estimate of costs attached to counsel’s submission). She asks that these funds be paid out of the estate pending final determination of her Originating summons, on her undertaking to repay the estate if at the end of the day she does not succeed and the court does not ultimately find in her favour. In accordance with s.7 (4) of the ordinance she also accepts that the interim amounts shall be treated as if they had been paid on account.

25.  In her counsel’s submission the following arguments are also advanced on her behalf:

12. In real life practical terms, the available options are as follows :-

(1)  The Respondents pay MPS / Currey to the Applicant, and if the Applicant ultimately succeeds, then the interim sums will be taken into account; e.g. the monthly sums will be given credit for, and the Currey provisions will be taken into account on the question of Costs;

(2)  The Respondents pay MPS / Currey to the Applicant, but if the Applicant ultimately fails, then she may be ordered to repay whether in full or in part - and this might mean that the Applicant will then have to sell her landed property. The Respondents are not being placed under any real risks or substantial prejudice. They can enforce fully against the Applicant;

(3)  The Respondents are not ordered to pay MPS / Currey to the Applicant, and the Applicant is left with no choice other than to fire-sell her landed property right now in order to fund living expenses and pay legal fees - but of course, even if the Applicant is ultimately successful, the landed property, once sold, can never be recovered back. This, it is submitted, is unfair and unreasonable.

As will be seen below, these arguments are basically accepted. 

The Respondent’s case

26.  In essence the Respondent’s take a negative stance. They deny that the Applicant had a relationship with the Deceased or that she is entitled to anything from the estate. They say that she was not maintained by the Deceased, but rather that she was simply well paid as his PA/secretary for services rendered. They also maintain that given that the Deceased lived for a further six years following his second stroke that the Mental Health Committee was entitled to take the action that they did, which effectively meant that the 2^nd Codicil was worth very little, if indeed ultimately it was worth anything at all. This included the sale of the Lippo property for HK$53 million. The Respondent’s maintain that the proceeds of that sale were then used to maintain the Deceased and to pay for his medical expenses and other costs.

Should interim financial provision be made for the Applicant out of the estate, to include litigation funding?

27.  For the avoidance of doubt I accept that it would be appropriate, in this case, to make an order for interim financial support to include litigation funding notwithstanding the arguments concerning the Applicant’s locus standi. I also accept that it would be appropriate in such circumstances to proceed cautiously. I further accept the undertaking that has been proposed by the Applicant namely that if she is not successful in this litigation that she will repay these monies to the estate. I will direct that the Applicant provide an undertaking to that effect, in order to avoid any possible misunderstandings in the future.   

How much should be paid as interim financial support and as litigation funding and on what terms?    

Discussion

Is the Applicant in need of immediate financial assistance?

28.  Despite the Respondents vigorous assertions to the contrary, it is accepted that the Applicant is in need of immediate financial assistance. Counsel for the Applicant put it thus in their Reply submission

2.   … - The Flat has net equity of HK$19.168m (gross value of HK$25.16m less Mortgage of HK$5.99m); therefore, the Applicant’s ‘net assets’ of HK$16.79m is more than completely tied up in the Flat … and the Applicant’s available liquidity is only HK$252,434.66 …, with (substantially reduced) monthly expenses of HK$149,510.72 ….

3.   Hence, the core ‘test’ or considerations, the Applicant submits, are those set out in Paragraph 12(1) to (3) of A’s First Skel. The Applicant has exhausted her ability to borrow / charge (especially with no income), and she has nothing left to sell other than the Flat [§13(13), A’s First Skel].

4.   It is unfair and unreasonable to compel the Applicant to sell her only Flat. Most of the points have already been canvassed in A’s First Skel. Furthermore, the present timing for a quick-fire-sale is particularly bad - especially with the Hong Kong protests, international trade-war, tightening of Mainland PRC fund controls, lack of Mainland interest in Hong Kong properties, serious slowing down of the Hong Kong property market. To achieve a ‘quick sale’ in the present environment is essentially impossible, unless the Applicant is compelled to take a very substantial hit in terms of selling at a severe loss or grossly under-market in order to achieve a ‘quick sale’.

5.   The question is - In these present circumstances as they now stand, is it fair and reasonable that the Applicant must sell her only Flat before turning to the Estate for interim financial assistance (which she has Undertaken to repay in the event of her Cap.481 claim failing).

I accept what is stated here and that it would not be reasonable to expect the Applicant to sell her only asset at this stage. 

Consideration of the relevant section 5 factors

a)     the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

29.  As indicated above the Applicant has limited financial resources. In so far as her needs are concerned, she initially sought approximately HK$250,000 per month as set out in her Form E dated the 29 May 2019. However, by the time that she filed her updated affirmation of the 24 August 2020, and as indicated above, her claim had reduced to approximately HK$150,000 per month as follows:

7. My current monthly expense is around HK$149,510.72. The breakdown is as follows:

Household expenses

Item	Amount	Reference
Rent	HK$2,000	Starting December 2020, it should be zero since I plan to move back to the Flat. This is currently HK$2,000 per month after offsetting the HK$52,000, being rental that I am receiving from the Flat)
Mortgage (SG is currently paying a sum of HK$37,401.78 per month as mortgage repayment) This mortgage was taken out as I had no cash for my day to day expenses Note: As a result of the COVID-19 crisis, the bank had on 4 May 2020 offered a 6 months concession period, during which I am only obligated to repay the interest of this loan and not the principal amount. Produced and shown to me marked “LYYC6-5” is a true copy of the offer letter by Dah Sing Bank of 4 May 2020. I have accepted this concession scheme which covers the period from 24 June 2020 to 24 December 2020.	HK$37,401.78	There are now produced and shown to me marked “LYYC6-6”, true copies of the monthly advice from April 2020 to July 2020.
Utilities (electricity, gas, rates, rent, telephone & water)	HK$5,908.94	There are now produced and shown to me marked “LYYC6-7”, true copies of the July to September 2020 demand for rates and the Government Rent Demand Notes for the period from 26 December 2019 to 24 June 2020 and true copies of the following: 1.  CLP Bill of 24 June 2020 covering the period from 24 April 2020 to 23 June 2020 2.  Water Supplies Department Bill of 26 May 2020 covering the period from 17 February 2020 to 16 May 2020 3.  Towngas Bill of 9 June 2020 covering the period from 8 April 2020 to 8 May 2020 Other expenses, such as PCCW can be found in the Credit Card Statements shown in Exhibit marked “LYYC6-19”.
Management fees	HK$4,828	There are now produced and shown to me marked “LYYC6-8”, true copies of the Billing Statement of the Flat and its carpark.
Food	HK$15,000	There are now produced and shown to me marked “LYYC6-9”, true copies of record of some of the purchases since April 2020. Other expenses can be found in the Credit Card Statements shown in Exhibit marked “LYYC6-19” and log book shown in Exhibit marked “LYYC6-20”.
Household	HK$1,800	There are now produced and shown to me marked “LYYC6-10”, true copies of record of some of the purchases since April 2020. Other expenses, such as gas can be found in the log book shown in Exhibit marked “LYYC6-20”.
Transport (including car expenses)	HK$2,500	There are now produced and shown to me marked “LYYC6-11”. true copies of all relevant Invoices and Bills in relation to the car covering the period June to July 2020. Other expenses, such as gas can be found in the Credit Card Statements shown in Exhibit marked “LYYC6-19”.
Insurance premia	HK$4,500	There are now produced and shown to me marked “LYYC6-12”, true copies of one of the premium notices covering the period from 1 February 2020 to 31 January 2021. The rest of the premium payments can be found in the Credit Card Statements shown in Exhibit marked “LYYC6-19”.
Domestic helper(s)	HK$10,505	There are now produced and shown to me marked “LYYC6-13”, true copies of the receipts of salary of the domestic helpers covering the period April 2020 to July 2020.
Others (i.e. Account and Business Registration fees in relation to DE)	HK$417	There are now produced and shown to me marked “LYYC6-14”, true copies of the relevant Fee Note and Business Registration Certificate of SG for year 2020/2021.
Total monthly household expenses:	HK$84,860.72

Personal expenses

Item	Amount	Reference
Meals out of home (Given COVID-19, the amount spent on meals out of the home is much less than before)	HK$2,000
Clothing / Shoes	HK$7,400
Personal Items and grooming (including haircut and cosmetics)	HK$5,000	There are now produced and shown to me marked “LYYC6-15”, true copies of record of some of the purchases since April 2020.
Entertainment / presents	HK$5,000	Some of the expenses can be found in the Credit Card Statements shown in Exhibit marked “LYYC6-19”. Other expenses can be found in the log book shown in Exhibit marked “LYYC6-20”.
Holiday (Given COVID-19, the amount spent on holiday is nil at the moment but it used to be around HK$7,500 per month)	HK$0
Medical / Dental and other medical and health	HK$6,250	There are now produced and shown to me marked “LYYC6-16”, true copies of record of some of the purchases since April 2020.
Dependent family members (as father had passed away)	HK$0
Legal Fees	HK$38,000	There are now produced and shown to me marked “LYYC6-17”, true copies of Withers’ Bills covering the period January 2014 up to date.
Miscellaneous Expenses (e.g. pets)	HK$1,000	There are now produced and shown to me marked “LYY6-18”, true copies of record of some of the purchases since April 2020. Other expenses can be found in the Credit Card Statements shown in Exhibit marked “LYYC6-19” and in the log book shown in Exhibit marked “LYYC6-20”.
Total monthly personal expenses:	HK$64,650

Total monthly expenses:

HK$149,510.72

30.  I should say at the outset that I accept that this claim needs to be considered in context. On the Applicant’s own case she was receiving at least HK$150,000 per month before the 30 September 2013 i.e. HK$38,600 per month as her salary, HK$70,000 per month as additional maintenance, HK$500,000 per annum or say HK$41,500 per month rounded down being further additional maintenance, plus the provision of a car and the property. She also says that she received other financial gifts from time to time.

31.  The question then becomes an assessment of the Applicant’s current financial needs and those that she is likely to have in the foreseeable future? I should say at the outset that I accept that it is reasonable for the Applicant to return to the Happy Valley property to live. Consequently, going forward she will have the mortgage to repay in the sum of approximately HK$37,400 per month. Following a six-month concession period, the Applicant will recommence paying this sum in January 2021. I accept the figures given by her for the utilities and the management fees. However, I also accept that HK$15,000 per month for food for a single woman seems very much on the high side. I will allow HK$10,000 per month. The figure for household expenses, transport and insurance shall stand. I further accept that there is no need for the Applicant to have two domestic helpers. I will allow HK$5,000 per month under this head. Thus, I shall allow HK$35,000 per month for general expenses with effect from the 1 November 2020, which shall be increased to HK$72,500 per month with effect from the 1 January 2021 (to enable the Applicant to pay the mortgage after the end of the concession period). Thus, the table should read as follows:

Item	Amount
Rent	N/A
Mortgage (With effect from the 1 January 2021)	(HK$37,401.78)
Utilities (electricity, gas, rates, rent, telephone & water)	HK$5,908.94
Management fees	HK$4,828
Food	HK$10,000
Household	HK$1,800
Transport (including car expenses)	HK$2,500
Insurance premia	HK$4,500
Domestic helper(s)	HK$5,000
Others (i.e. Account and Business Registration fees in relation to DE)	HK$417
Total monthly household expenses:	HK$34,953.94 (HK$72,355.72)

Litigation funding

32.  In so far as the Applicant’s personal expenses are concerned, I shall allow the sum of HK$38,000 per month as a contribution towards her legal fees, such sum to be paid directly to her solicitors until the FDR hearing or in the event that there is no FDR hearing until trial. This sum shall be paid on the premise that it shall be taken into account when it comes to the question of costs at the end of the day (see paragraph 25 above). I appreciate that counsel have suggested that the legal fees may increase going forward and that they have suggested that the sum of HK$48,000 per month may be more realistic estimate. But given that this is the sum that the Applicant has actually paid on average to date and given that I am tasked with proceeding cautiously, it seems to me that the sum of HK$38,000 per month is the more reasonable figure.  

Personal expenses

33.  With respect to the remaining personal expenses, I accept that some of these are also on the high side. I shall allow an additional HK$20,000 per month in this regard.

b)     the financial resources and financial needs which any other applicant for an order under section 4 has or is likely to have in the foreseeable future;

34.  There are no other applicants at present and therefore this section is not relevant.

c)     the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

35.  It is suggested by S that her sisters have other financial needs and that they are keen for there to be further distributions from the estate. However, as pointed out by counsel for the Applicant in their submission:

15.   None of the Beneficiaries have filed / served evidence in relation to their own personal full and frank financial disclosure so, the Honourable Court should not be asked (and cannot possibly be asked) to consider the Beneficiaries’ financial circumstances. In effect the Beneficiaries are running ‘millionaires defences’ in that the Honourable Court should not and cannot be asked to ‘balance’ their respective financial positions (e.g. as compared with the Applicant) and it should not (and cannot) be submitted that the Applicant should be deprived of MPS / Currey because the Beneficiaries (also) have ‘needs’; in order to say that, the Beneficiaries must first as a precondition provide full and frank financial disclosure as to each of their own financial positions including ‘needs’, so that the Honourable Court can actually consider the evidence in relation to the same - c.f. Section 5(1)(c) of Cap.481.

With respect I agree.

d)     any obligations and responsibilities which the deceased had towards any applicant

36.  It is also of note that the estate has chosen to provide for the Deceased’s second family (i.e. Mistress S), even though they are not beneficiaries under the will although the second wife did benefit under the 1^st Codicil. 

e)     the size and nature of the net estate of the deceased;

37.  The Deceased is said to have been a hugely wealthy man. However, what is left in the estate is relatively modest. It is not disputed that a discretionary trust was established by him in 2007 and that originally he, the wife and the legitimate children were beneficiaries under that trust. According to the Form E filed by S on the 30 May 2019 there was just under HK$35 million in the estate as at that time. She also said in that document that:

Since the commencement of the administration of the Estate, steps have been taken to sell and to realise the value of the antiques owned by the Deceased and sales proceeds totalling HK$23,939,930 have been realised.

Since the commencement of the administration of the Estate, the Estate has (i) paid for living and medical expenses of Madam CSL (Mistress S) totalling the equivalent of around HK$1,357,500, (ii) paid funeral expenses of the Deceased of HK$1,767,132 and the equivalent of HK$6,290,724 for the cemetery expenses of the Deceased in Wuxi, the PRC, and (iii) paid legal expenses totalling HK$5,516,026. The Estate has also received from HSBC Life (International) Limited a payment of HK$1,712,879.00 representing the Deceased’s ORSO benefits from WKS and WKM.

The Estate’s shares of Act I International Limited (“Act I”) have been sold in a share sale of the property at (The Peak property) … for consideration of HK$280 million, which sale was completed in December 2018. The Estate received HK$16,356,147 being its portion of the net sale proceeds attributable to its 5,000 shares, and a partial distribution of HK$16,000,000 was then made by the Estate to the beneficiaries of the residuary estate.

In S’s last affirmation dated the 20 August 2020 she confirmed that the monies in the estate had fallen a little to just over HK$33 million and that of this sum over HK$16 million is held in cash. 

f)     any physical or mental disability of any applicant;

38.  Thankfully this is not a relevant consideration in this case.

Other factors

39.  Similarly, other than as set out above it does not seem to me that there are any other relevant factors to be taken into account at this time.

Decision

40.  On a broad brush basis therefore I shall order that the estate do pay the Applicant HK$55,000 per month for her interim financial support (i.e. HK$35,000 per month for her general expenses and HK$20,000 per month for her personal expenses), with effect from the 1^st November 2020, such sum to be increased to HK$92,500 with effect from the 1 January 2021 (to allow for the additional sum of HK$37,500 per month for the mortgage repayments). Further the estate shall pay the sum of HK$38,000 per month to the solicitors for the Applicant as litigation funding with effect from the 1 November 2020 until the FDR hearing or trial, in the event that there is no FDR. 

41.  These payments are subject to the proposed undertaking to be given by the Applicant. To that end it is further directed that the Applicant do provide the undertaking as set out in paragraph 25 above within the next 7 days. Further any sums received by the Applicant may ultimately be off set against her share of the estate in the event that it is found that she is so entitled.

Costs

42.  Given the Respondents stance I accept that the Applicant had no option but to issue this application and that although she has not been completely successful on every point she has been largely successful and certainly more successful that the Respondents. It follows therefore that costs should follow the event in the normal way. Consequently, I shall make an order nisi to be made absolute in 28 days’ time that the Respondents, as executrices of the estate, shall pay the Applicant’s costs of and arising out of the summons dated the 19 November 2019 on a party and party basis to be taxed if not agreed. There shall be certificate for both counsel.

Other directions

43.  In the Transfer Up/Case Management Ruling dated the 31 July 2020 I stated inter alia as follows:

6.  Having read each parties’ written submissions together with the relevant affidavits, I have been decided that it would be more appropriate for this court to determine the issue of interim maintenance before transferring the matter up to the High Court. To that end directions will be given at the end of this ruling for this aspect of the case to be dealt with by way of paper disposal. It is of note that affirmations and Form E’s have already been filed and that the parties will only need to file short updates. Thus, it should be possible to deal with this aspect of the case in a timely manner. The parties can then indicate whether or not they wish the case to proceed to a FDR hearing, in which case the matter shall remain in the Family Court for that purpose. If there is no settlement or in the event that the parties decide that a FDR hearing might not be fruitful, then the case can be transferred up to the High Court for trial.

44.  I further ordered inter alia as follows:

viii)  The FDR hearing shall be adjourned until after the interim maintenance judgment has been handed down, whereupon further consideration can be given for the suitability or otherwise of this matter proceeding to FDR.

45.  It seems to me that notwithstanding the nature of this dispute and its background, that serious attempts should now be made to settle the Applicant’s claim. Consequently, I shall, in the first instance adjourn this matter for a further callover. The parties may also wish to consider the possibility of a Mediator assisted FDR hearing. With this in mind I shall adjourn the case for a short hearing on the 22 December 2020 at 9:30 am before HH Judge Melloy in court no. 4. Both sides shall personally attend that hearing.