YKC v. LMYT

FCMC 9062 / 2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 9062 OF 2015

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

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The wife’s application

1. This is the hearing of the Respondent wife (hereinafter called “W”)’s Summons dated 20 August 2015 for maintenance pending suit (hereinafter called “MPS”) in the sum of HKD30,000 per month for her maintenance and HKD30,000 towards her legal costs provision.  She also requested the Petitioner husband (hereinafter called “H”) to continue paying the utilities expenses and management fees of the former matrimonial home (hereinafter called “Parc Palais”).  H did not make any open offer in response to W’s MPS application, as he considered that the MPS application is unreasonable and oppressive.

Background

2. The parties began cohabitation in November 2009.  They were married in November 2011.  There is no child out of this marriage.  The parties separated in July 2014, H filed the petition for divorce on 12 December 2014.

3. M L Ltd (hereinafter called “the 2^nd Intervener”) that has 2 shares, respectively held under the names of H and W, was formed in December 2010.  The 2^nd Intervener purchased a shop situated in Kowloon (hereinafter called “Shop 9”) in February 2011.  W said the down payment i.e. 40% of the purchase price was paid by her mother (hereinafter called “the 1^st Intervener”), and the remaining 60% was paid by the parties partly with their savings and partly with a mortgage loan.  H has been responsible for the repayment of the said mortgage loan.  The 2^nd Intervener purchased another flat situated in Metro Harbour View (hereinafter called “Metro Harbour View”) with a mortgage loan in February 2012.  W said the down payment and all incidental expenses for the purchase of Metro Harbour View were paid by the 1^st Intervener, and the mortgage repayments were met with the rental income generated from Metro Harbour View.  W said the 1^st Intervener therefore was the 40% beneficial owner of Shop 9 and the 100% beneficial owner of Metro Harbour View despite that the parties each holds 50% share in the 2^nd Intervener.  By the Order dated 9 November 2015, the 1^st and 2^nd Interveners were joined in these proceedings and it is ordered that the issues on the beneficial ownership in respectively of certain properties including Shop 9 and Metro Harbour View were to be tried as preliminary issues (hereinafter called “the third party interest proceedings”).  The third party interest proceedings are on-going.

Legal principles

4. W’s application is governed by section 3 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) (hereinafter called the “MPPO”).

5. The Court has a wide discretion in the matter, subject to the result being reasonable.  In TL v ML & Ors (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263, Deputy High Court Judge Mostyn QC (as he then was) stated, 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. The Court will consider all factors that may influence the outcome of the application so as to make such order as it regards reasonable in all circumstances of the case.  In C v F [2006] HKFLR 41, HHJ Bruno Chan stated at paragraph [45]:-

“Although the sole statutory guideline in considering maintenance pending suit is that the award shall be ‘reasonable’, the court will nevertheless bear in mind all the factors drawn to its attention relating to the marriage and the parties to it and perhaps the two most outstanding matters in every case, as in this one, are the standard of living of the parties, and the ability of the husband to pay.”

My view

7. W has been a housewife since March 2010, and she said during the marriage, she used to receive from H on average about HKD40,000 per month but sometimes more, and he made payments for the mortgage instalments, utilities expenses, management fees, household expenses of Parc Palais, and she was wholly financially dependent on him, but shortly after he left Parc Palais on 1 July 2014, he cut off his financial support without first discussing with her, except to the extent that he is still paying the mortgage repayment of Parc Palais and Shop 9 in the sum of about HKD35,000 per month and HKD24,351 per month respectively.  She has no income and as of 19 August 2015, she has only HKD28,847.51 left in her bank account, and she said she has borrowed in the total sum of HKD404,649.34 from her mother and friends in order to meet her monthly expenses and legal fees.  According to her 3rd Affirmation, while she is “keeping her spending to the absolute minimal”, W needs an extra sum of HKD33,745 per month for monthly expenses as follows: -

Items	HKD
Transportation	2,500
Meals/ Food	5,300
Clothing	5,000
Personal grooming	4,700
Insurance	1,845
Utilities (for electricity and gas)	1,600
Household expenses	1,500
Pets (only for grooming and medical)	3,000
Entertainment	4,000
Medical	1,000
Others	3,300
Total:	33,745

8. H is a medical doctor, and he accepted that he used to be responsible for the payments for the mortgage instalments, management fees, insurance, government rate and rent and utilities expenses of Parc Palais, but he said W does not have needs for MPS in view of the following:

(1) W was a successful insurance agent with substantial income and savings of her own, and before and during the marriage, the parties were financially independent and they always kept their financial matters separately.  He denied W used to receive on average about HKD40,000 per month from him.  He said during the marriage, she did not need his financial support.

(2) She is in fact very financially sound.  In particular, she has transferred over HKD2 million from her two bank accounts to the 1^st Intervener just before the parties’ exchange of their Form Es.

(3) W has the profits from the rental income (after mortgage repayments) generated by the said properties held by the 2^nd Intervener for her own use.

(4) She can work.

(5) W’s alleged monthly expenses in the sum of HKD33,745 per month are unreasonable, particularly bearing in mind that she is living in Parc Palais rent free.

9. H further said he does not have the ability to pay the MPS as requested.  H is paying the mortgage repayment of Parc Palais and Shop 9 in the sum of about HKD35,000 per month and HKD24,351 per month respectively, and interim MPS to W in the sum of $6,500 per month pursuant to an Order dated 14 September 2015 pending the outcome of this application.  

10. The parties went to great lengths to show their respective cases on whether W was or was not financially dependent on H during the marriage, which, of course, is a relevant consideration in an ancillary relief application.  I however have no intention to make a fact finding on the matter on paper examination.  As I have said in the above paragraph (6), predominantly the reasonable needs of the applicant and the ability of the payer to pay are relevant for a MPS application.  The approach of the Court is to apply a broad-brush approach usually without oral evidence, on the basis that the Court can adjust any over or under payment at the time of the substantive order as to ancillary relief.

11. I firstly deal with the 2^nd point raised by H in the above paragraph (8).  W said the transfers of the said HKD2 million from her bank accounts to the 1^st Intervener were actually done by the 1^st Intervener, who has been an authorised signatory of the said bank accounts, and the said monies are hers, despite that the same were kept by W in her bank accounts.  The issues on the beneficial ownership of the said HKD2 million are to be dealt with in the third party interest proceedings.  It seems however the undisputed fact that the 1^st Intervener has been an authorised signatory of the said bank accounts supports W’s case in this respect, at least to the extent that prima facie the 1^st Intervener might have some interest in the said monies.  For the present purpose, I accept that the said HKD2 million should not be counted as being available to W for her immediate needs.

12. About the 3^rd point raised by H, Shop 9 and Metro Harbour View have been rented out for about HKD31,000 and HKD15,500 per month respectively.  The monthly mortgage repayment of Shop 9 is paid by H, and the monthly mortgage repayment of Metro Harbour View is only HKD9,451.  The rental income is paid into the 2^nd Intervener’s bank account of which W and the 1^st Intervener are the only two authorised signatories.  W accepted that the total sum of HKD421,800 was withdrawn from the 2^nd Intervener’s bank account since the parties’ separation dated 1 July 2014.   W explained the withdrawals were made to repay a debt owed by her to the 1^st Intervener.  Once again for the present purpose, I discounted the said HKD421,800 as income available to W for her interim maintenance.  According to W and the 1^st Intervener, the 1^st Intervener is the 40% beneficial owner of Shop 9 and the 100% beneficial owner of Metro Harbour View.  Yet again for the present purpose, I accept that 40% and 100% of the rental income from Shop 9 and Metro Harbour View respectively should not be counted as being available to W for her immediate needs, inasmuch as the issues on the beneficial interest of the said properties are to be determined by the ongoing third party interest proceedings.  Even if one adopts W’s case for the present purpose, the remaining 60% of the rental income from Shop 9 i.e. about HKD31,000 X 60% = HKD18,600 however must be treated as income available for W to meet her needs.

13. As to W’s ability to work, W was graduated with a degree in Retail, Design and Management from London College of Printing in England, and worked as an insurance agent from about 2006 to 2010 in Hong Kong.  She said she earned on average about HKD600,000 a year during the aforesaid period.  She said that she resigned from her job around March 2010 with the intention of having a baby and starting a family.  H however said that she made the decision to resign from her employment suddenly by herself, and her resignation was totally unrelated to any family planning.  Notwithstanding the parties’ disputes on the reason why she quitted her previous employment, she is in the age of 37, healthy and well-educated, has no need to take care of any child or elderly.  I readily accept that she is fit and has the ability to work.  She apparently has not lost her touch with the business world even after her resignation from her previous employment in 2010.  She started a soap-making business on 2 June 2011, despite that she said she had never considered the same as an “employment” as the business was merely for interest.  Also, she has been appointed by TG Holborn (HK) Limited as a financial consultant since 9 September 2011, and engaged by KGI Investments Managements Limited as an Investment Representative since 11 November 2014.  There is no evidence on how much she can earn when she works.  Trying the best to make an estimate in the circumstance, and at pains to err on the side of caution, I believe probably she is capable to make a monthly income of no less than HKD10,000.

14. H further said W’s alleged monthly expenses of HKD33,747 are unreasonable.  She said the parties had lived a very comfortable living standard during the marriage, to which H categorically denied.  Despite that it seems indisputable to me that the parties lived a middle class living standard, She however might have to face the reality that once the divorce process has started, her standard of living could 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 e.g. 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.  I consider that W should consider cutting down on her expenses on clothing (HKD5,000 per month), personal grooming (HKD4,700 per month), pets (only for grooming and medical, HKD3,000 per month) and entertainment (HKD4,000 per month).  For my part, I consider it is not unreasonable to require her to save as much as 50% of these expenses.  I therefore take the view that with the rental income from Metro Harbour View and the interim MPS, W is able to meet her reasonable monthly expenses. 

15. I have taken the view that it is not unreasonable to expect her to work.  If and when she works, she will be much better off.

16. On the other hand, H said he does not have the ability to pay the MPS as requested.  W said H has substantial savings in his bank accounts that shows his ability to support her during this interim period.  As of 9 November 2015, he had HKD525,166.24 in his bank accounts, but he is due to pay his tax of HKD150,000 and legal costs of about HKD250,000.  I do not accept that he can pay the MPS as requested with his remaining savings.  Despite W’s queries about H’s income, he managed to produce proof that his current monthly income is about HKD110,000 to HKD120,000.  As stated by him, his monthly expenses are as follows: -

Items	HKD
Mortgage repayment of Shop 9	28,000
Mortgage repayment of Parc Palais	35,000
Rent	19,000
Interim MPS payment	6,500
Rent for car park	3,500
Management fee, government rate and rent for Parc Palais	3,500
Personal tax amortized over the year	18,500
Insurance premia (including personal insurance, car insurance, properties insurance (Parc Palais and Shop 9), professional insurance	18,000
Utilities	1,000
Personal expenses	15,000
Contribution to parents	20,000
Total:	168,500

17. The monthly mortgage repayment of Shop 9 is only HKD24,351 per month but it is nevertheless obvious that his monthly expenses on the indispensable items such as mortgage repayments of Shop 9 and Parc Palais, rent, utilities, tax payment, professional insurance and personal expenses already exceed his monthly income.  In view of that, Ms. Chan for W suggested that H should borrow personal loans from the bank to meet W’s request.

18. I have found in the above that W is able to meet her reasonable monthly expenses with 60% of the rental income from Metro Harbour View and the interim MPS that H is now paying.  In addition, he is paying the mortgage repayment of Parc Palais where W is living rent free.  I do not consider that it is fair to compel him to get into debts for W’s present request.  I believe W should seriously consider working and become productive.

19. By reason of the matters aforesaid, I consider that her application for MPS for monthly maintenance is unmeritorious, save to the extent of the interim MPS already ordered by this Court.

Provisions for Legal Costs

20. Since the English Court of Appeal’s decision in Currey v Currey [2007] 1 FLR 946, judges in the Hong Kong Family Court have relied on the case as setting out the guidelines for granting applications for costs contribution as MPS.  The parties accept that the so-called Currey test should be applied in the present application.

21. H has not taken issue on the questions such as whether W has undisclosed assets that she can reasonably deploy, or if she can borrow with or without security, or that she can or cannot be covered by a Sears Tooth arrangement in respect of her legal costs with the solicitors.

22. W also produced proof that she has applied for legal aid and her application was refused

23. In the present application, the questions to answer are how much is W’s need for legal costs provisions, and H’s ability or inability to pay.

24. W’s estimate of her legal costs from today up to and including the FDR hearing is as follows: -

Items	Solicitor’s costs	Counsel fees	Total HKD
The third parties interest proceedings, including pleadings, discovery, witness statements, PTR and trial hearing			360,500
FDR (1 day)	30,000	50,000	80,000
Miscellaneous monthly expenses at the rate of HKD8,000 per month, up to June 2016	48,000		48,000
Total:			488,500

25. With the above assessment and her impression that she will likely incur the said HKD488,500 in the next 6 months, W now suggests that she needs legal costs provision in the sum of HKD68,083 per month, despite that her original application for provision legal costs contribution is only for HKD30,000 per month .

26. W’s estimated costs for the third party proceedings are HKD360,000.  The 1^st Intervener filed her Points of Claim on 7 December 2015.  Taking an overview of the same, one can see that the 1^st Intervener’s claim is in agreement with W’s case as stated in her From E and Affirmations.  I do not accept that she needs as much as HKD360,000 to defend the 1^st Intervener’s claim that she agrees.  In that case, I also do not consider that it is fair to force H to borrow from the bank in order to make contribution to her legal costs for the defence of a claim that she agrees.

27. With her estimate of costs, even disregarding the costs relating to the third party interest proceedings, W still needs about HKD100,000 to HKD150,000 for her legal costs from now to the FDR.   For the purpose of the present application, I accept that she does not have the means to meet such legal costs.  I however have also found in the above that H’s reasonable monthly expenses exceed his monthly income, so that he does not have the means for legal costs provision, too.  W has borrowed from the 1^st intervener to meet her legal costs.  Despite W’s argument to the contrary, I believe such financial assistance from the 1^st Intervener would continue if a request for assistance were to be made.  I consider that, in view of that the limited means currently available to the parties, W can borrow from the 1^st Intervener to meet her immediate need for such legal costs.

Conclusion

28. H has indicated that he is prepared to continue paying the mortgage repayment of Parc Palais and Shop 9, and the interim MPS. 

29. It is ordered that W’s application for MPS for monthly maintenance and legal costs provisions be dismissed, save that H shall continue paying the mortgage repayment of Parc Palais and Shop 9, and the interim MPS until further order of the Court.

30. In view of that the beneficial ownership of Shop 9, Metro Harbour View, the abovementioned HKD2 million (paragraph 11 above), HKD421,800 (paragraph 12 above) is yet to be determined, I am minded to make an order nisi that the costs of 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.

31. I am most grateful for counsel’s assistance.