B N P also known as S S N v. B P

FCMC 8191 / 2019

[2020] HKFC 100

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 8191 OF 2019

________________________

________________________

________________________

J U D G M E N T

________________________

Application

1.  This is an application on 8 August 2019 by the Petitioner wife for maintenance pending suit pursuant to section 3 Matrimonial Proceedings and Property Ordinance Cap 192 (“MPPO”) and for interim maintenance for the children of the family, under section 5 of the MPPO.

2.  By and Order of Court dated 27 February 2020, the application was directed to be determined by paper disposal.

Issues

3.  The issue to be determined is how much should the Respondent husband pay to the wife and the children. 

4.  In addition to undertakings that husband is presently giving, the wife by her Summons, is asking for:

i.  HK$280,000 per month as maintenance pending suit for herself, and interim maintenance for the two children to be backdated to the date of Petition in March 2019; and

ii.  HK$120,000 as legal costs provision to be backdated to the date of Petition in March 2019;

The Background

5.  The parties were married on XX August 1990. Husband is a businessman and works for his family business, he is also part shareholder, and director of some of these companies (“family companies”); he is now age 52.  The wife has been a housewife throughout the marriage, and is financially dependent on the husband, she is now age 51.

6.  There are two children of the family, the elder daughter A is now age 19 and the younger son R is age 15.  A now studies in University in the UK, and return to Hong Kong for vacation; R resides with wife in the matrimonial home at Flat 5A, B Court (“matrimonial home”).

7.  The matrimonial home is owned by one of the family companies PTI Limited.

8.  According to the wife, the parties’ relationship had deteriorated since 2014-2015 over the husband’s extra marital affairs.  This eventually led to the wife initiating divorce proceedings in March 2019 based on mild unreasonable behaviour, but she then filed fresh petition on 11 July 2019 based on one-year separation.  Decree Nisi was granted on 20 November 2019.

9.  By an Order dated 27 May 2019, the parties have joint custody of R; wife has care and control, with reasonable access to the husband.

10.  And on a subsequent Order dated 10 September 2019 (“September 2019 Order”), the husband undertook to pay for the following:

i.  The school / university fees of both children;

ii.  A’s rent in the UK;

iii.  A’s living expenses in the UK in the sum of HK$5000 per month;

iv.  R’s school bus transport to and from school;

v.  R’s uniform;

vi.  The medical insurance of the wife and the children; and

vii.  The Salary of one domestic helper at the matrimonial home.

And consented to pay wife $50,000 per month, commencing 7 September 2019.

The Law on Maintenance pending suit and interim maintenance

11.  In an application for maintenance pending suit under section 3 of the Matrimonial Proceedings and Property Ordinance, the court is empowered to:

“order either party to the marriage to make to the other such periodical payments for his or her maintenance and for such term, being a term beginning not earlier than the date of the presentation of the petition or making of the application and ending on the date of the determination of the suit, as the court thinks reasonable.”

12.  The legal principles arising therefrom are clear; on such a claim, the court needs to look at the applicant’s financial needs, which needs to be reasonable; and the respondent’s ability to pay.  

13.  Mr Justice Hartmann in the often-quoted Court of Appeal decision in HJFG v. KCY [2012] 1 HKLRD 95 summarised the principles as follows,

“34.  By definition, therefore, maintenance pending suit is restricted to payments which constitute ‘maintenance’, which are reasonable in the circumstances and which will endure for no longer than it takes to determine the divorce litigation.  ‘Maintenance’ is a broad concept.  I do not seek to define its exact meaning but it seems to me that it must be restricted to those payments necessary to meet the recurring costs of living at whatever standard of living is appropriate.  That being the case, no matter how great the wealth of the parties and how unevenly distributed that wealth may be at the time an application for interim maintenance is made, the court has no jurisdiction to make orders which for all practical purposes result in a form of pre-trial capital re-balancing.  In the present case, the judge recognised the long-established approach of looking to the “immediate and reasonable needs” of the wife and son.

35.   As to the amount of maintenance pending suit that may be paid, the Ordinance provides only that it must be ‘reasonable’, that is, having regard to the circumstances of the case, that it must be fair.  

36.   An important factor in determining fairness is a consideration of the marital standard of living.  In this regard, each case must be considered according to its own circumstances.  It is not simply to be assumed that great wealth equates to great extravagance.  Some married couples who enjoy great wealth spend with comparative modesty and with a discipline born of discretion, others enjoy consumption on a grand scale.

37.   The principles that have emerged over time to guide judges in matters of interim maintenance have been fashioned in the main to ensure fairness.  This is well illustrated in the judgment of Nicholas Mostyn QC, sitting then as a deputy High Court judge, in TL v ML and Others (Ancillary Relief: Claim against Assets of Extended Family) [2006] 1 FLR 1263, at 1289, in which, having looked at earlier authorities, he derived the following principles that speak specifically to fairness or are based on the need to ensure it.  For present purposes, it is sufficient to cite the relevant principles without citing the judge’s reference to the source of those principles:

i.   The sole criterion to be applied in determining the application is ‘reasonableness’, which is synonymous with ‘fairness’.

ii.  A very important factor in determining fairness is the marital standard of living.  This is not to say that the exercise is merely to replicate that standard.

iii.  In every maintenance pending suit application there should be a specific maintenance pending suit budget which excludes capital or long-term expenditure, more aptly to be considered on a final hearing.  That budget should be examined critically in every case to exclude forensic exaggeration.

iv.  Where the affidavit or form E disclosure by the payer is obviously deficient, the court should not hesitate to make robust assumptions about his ability to pay.  The court is not confined to the mere say-so of the payer as to the extent of his income or resources.  In such a situation, the court should err in favour of the payee.

38.   Finally, it is to be noted that in applications for interim maintenance, when the amount to be paid is for a limited period only and not all of the evidence is necessarily before the court, it is not appropriate, nor indeed in most cases possible, for the court to conduct a detailed investigation into the finances of the parties.  While, in order to determine what is or is not reasonable, some analysis is always required, that analysis can be conducted on a ‘broad-brush’ basis.” (emphasis added)

14.  Against the backdrop of applying this broad-brush approach, the court reminds itself also that any under provision or over provision can be corrected at the final ancillary relief trial by appropriate set off.

The Family standard of living

15.  The family lived a comfortable lifestyle. The matrimonial home is a 1500 square foot apartment, they had enjoyed the service of 2 helpers, 3 cars and 2 drivers.  The family expenses appeared to be borne by either the husband himself or the family companies. It does not appear to be in dispute that the husband gave wife $42,500 in cash monthly.  She also had three credit cards, which bills were settled by the husband.  A had a debit card and R had a supplemental credit card. 

Wife’s case

16.  It is the wife’s case that the family had a lavish and extravagant lifestyle, that she had been able to spend liberally in the past, there were no limits on her spending nor on the credit cards she was given. Husband gave her $42,500 cash each month for general and children’s expenses.  As the relationship deteriorated, the husband had unilaterally reduced the maintenance down to $30,000, stopped two supplemental cards, and did not pay for the third one.  Club Memberships at the Jockey Club and Football Club were no longer available, the children’s debit / credit cards had also been stopped and the latter were reactivated only on the daughter’s complain.

Husband’s case

17.  The husband claimed that the wife had spent excessively despite his protest; and that their extensive credit cards expenses had been covered by drawings from his family companies. But it had affected the companies’ cashflow and the drawings were no longer available to him.  He had taken out loans from a friend and from two banks which he has to service, and claimed to be no longer able to borrow and had attached two loan rejection letters to his affirmation in opposition. The husband claimed to be drowning in debts and had urged the wife to liquidate shares of the family companies in her name to pay for the expenses. 

The Wife’s Needs

18.  Wife had submitted the following expenses in her affirmation: 

General
Rent	N/A
Mortgage*	Unknown
Utilities*	Unknown
Management Fees*	$3,240
Food	Approximately $15,000
Household expenses Included repair and maintenance, taxi and uber for children, R’s school books and stationary, children’s lunches and pocket money and food delivery	Approximately $50,000
Car expenses*	Unknown Wife and children no longer have use of the car
Insurance premia*	Unknown
Domestic Helper*	Unknown Used to engage before the separation and paid for by the Husband
Others: Wifi at home      : Netflix      : Spotify      : iTunes	480 93 58 500
Sub-total:	$69,361
Personal
Meals out of Home	$40,000
Transport	$16,000
Clothing / Shoes	$50,000
Personal Grooming	$10,000
Entertainment / presents	$5,000
Holiday	$25,000
Medical / Dental*	Unknown
Tax	N/A
Insurance*	Unknown
Contribution to parents	$5,000
Others: Horse betting Others: Mobile phone*	$12,000 Unknown
Sub-total:	$163,000
Children
School Fees	$10,000
Extra Tuition	$43,500
School books and stationery	Paid for A by husband, and included under household expenses for R, estimated $1,000
Transport*	$1,618
Medical /Dental* (Bupa card)	Unknown
Extra-curricular activities / school activities	N/A
Entertainment / Presents	$10,000
Holidays	$25,000
Clothes / Shoes	$10,000
Insurance premium*	Unknown
Lunches and pocket money	Included under household expenses For R at $500/day = $15,000
Other transport	Included under household expenses. Some of A’s uber expenses in the UK and R’ taxi and uber expenses in HK. At $1000/day = $30,000
Child minding	N/A
Uniform*	$200
Others: school trips misc school expenses Others: A’s Deliveroo expenses	$2000 $9000
Sub-total:	$113,318
Total monthly expenses:	$345,689+

* Paid by the husband or the family companies during the marriage

19.  Suffice to say here that the level of these expenses was not supported by the limited receipts the wife produced; she said in her answers that she had not been collecting the receipts. 

20.  Regrettably, it was very unhelpful that she had included various children’s expenses under household expenses with no breakdown, which expenses should also have been segregated.

Husband’s ability to pay

21.  Looking at the husband’s Form E, his declared income was $50,000 per month, his expenses totalled $98,637 (which included $30,000 maintenance to the wife and the children), and the family companies paid for a variety of his personal and family expenses. 

22.  The husband’s undertakings given under the September 2019 Order could be itemized as follows based on the numbers given in his Form E.

School Fees for A	$14,600
School Fees for R	$12,840
Tuition for R	$10,850
School bus for R	$1,570
ECA for R	$1,085
Insurance premium	$3,551
Medical coverage	$16,883
	$58,539

Adding the costs of the domestic helper $5,595 and R’s uniform of $200, this took the total undertakings to $64,334.  Most of these payments were made by the family companies; on the husband’s own affirmation and answers, the family holidays and payment of credit card expenses were also settled by the family companies. So while the husband’s income appeared modest, the family companies had been a financial resource available to him, supplementing his income by more than doubling it. 

23.  Husband alleged that the wife had deliberately jetted up expenses for the purpose of the litigation; but looking at his own credit cards spending in 2017 and 2018, he had also spent large amounts in entertainment and luxury goods.  The average monthly expenses of the family on one AE card alone from March 2017 to December 2018 amounted to $200,000 per month, and spending on his other AE card was also high.  All of the credit cards expenses were paid up pretty much in full but lagged behind on and off after March / April 2019, the time when the wife initiated the divorce petition.

24.  The husband took out three loans in early 2019 which amounted to $1.049 million, namely:

From a friend MDB $150,000 on 14 Feb 2019 (which should have been repaid by 28 June 2019)

From Citibank $350,000 on 18 Feb 2019 (at $10,773 per month over 36 months)

From Bank of East Asia $549,000 on 5 March 2019 (at $23,753 per month over 24 months)

It is not clear from the evidence where he had expanded the money from these loans, and how he intended to service them.  And while the husband said that these loans were taken because he could not access his companies’ funds anymore, his spending on his credit cards continued to be quite high in 2019.

25.  The wife had made allegation of non-disclosure and while this MPS hearing is not a forum for finding of facts, I do take note that the husband had failed to deliver year end March 2019 financial statements for some of his family companies, despite the fact that there were two rounds of questionnaires asking for them, and a 7 months lapse between the questionnaire and his second Answer.  From the financial statements submitted, it was noticed that:

a.  A company, SEI Limited owned 99% by the husband (allegedly held on trust for the husband’s father) and 1% by the wife and of which both are directors disposed of a property at XX Emerald Garden in November 2017 for $22.9M, the financial statements showed net asset in the company of more than $16.9M.  The husband and his father’s evidence contradicted as to the purpose for which the property was sold. 

In the answers to questionnaire, husband stated that the net proceeds of sale were $10,242,131.42 and explained that the difference from the sale price went to settle the drawings he owed to family companies PTI Limited and BEM Limited.  These interflows of funds between companies not wholly owned by him remain to be explored.

b.  According to the financial statement of BEM Limited, there is an amount due to the husband of $20 million which arose in the year 2017-2018.

c.  As for PTI Limited, it is an operating entity still generating revenue, paying the husband’s salary and his family expenses.

26.  The husband declared expenses in his Form E were incongruent with his credit card spending, one such example is his meals out of home expenses were $6000 per month which is not the general picture to be gleaned from his credit cards statements.

27.  On a broad-brush basis, I am of the view that husband has the ability to pay more than he claimed and has the financial resources to do so.

The Analysis

28.  The husband did not proffer any counters on the wife’s proposed MPS budget, except to say that she spent a lot and it was excessive.  And as abovementioned the wife did not produce much receipts in support of her application.  The court is therefore not much assisted in deciding on this matter.

29.  I am conscious I need to look at what is the reasonable and immediate needs for the recurring expenses of the wife and the children.  I take the view that the expenses she declared was on the high side for a two persons household, even considering A’s return to Hong Kong while on vacation. 

30.  I therefore approach this matter on a broad-brush basis, mindful also as aforesaid, of the lack of evidence in support of the wife’s claims.

General	Wife’s numbers	My assessment
Rent	N/A	Paid for under the husband’s undertaking
Mortgage*	Unknown	N/A
Utilities *	Unknown	$3,000
Management Fees*	$3240	$3,240
Food	Approximately $15,000	$8,000
Household expenses Included repair and maintenance, taxi and uber for children, R school books and stationary, children’s lunches and pocket money and food delivery	Approximately $50,000	$2,500 Expenses relating to children have been segregated
Car expenses* Wife and children no longer have use of the car	Unknown	N/A
Insurance premia*	Unknown	Paid for under the husband’s undertaking
Domestic Helper* (Used to engage before the separation and paid for by the Husband)	Unknown	Paid for under the husband’s undertaking
Others: Wifi at home      : Netflix      : Spotify      : iTunes	$480 $93 $58 $500	$1200
Sub-total:		$17,940
Personal
Meals out of Home	$40,000	$8,000
Transport	$16,000	$5,000
Clothing / Shoes	$50,000	$7,000
Personal Grooming	$10,000	$3,000
Entertainment / presents	$5,000	$1,500
Holiday	$25,000	$8,000
Medical / Dental*	Unknown	Paid for by H or his family company
Tax	N/A	N/A
Insurance*	Unknown	Paid for under the husband’s undertaking
Contribution to parents	$5,000	N/A
Others: Horse betting Others: Mobile phone*	$12,000 Unknown	$0 $500
Sub-total:	$163,000	$33,000

31.  I also needed to segregate the children’s expenses which had been included into the household expenses.  However, as I had no breakdown to assist me, I have to approach this also on a broad-brush basis.

Children	Wife’s numbers	My assessment
School Fees	$10,000	Paid for under the husband’s undertaking
Extra Tuition for R	$43,500	$12,000
School books and stationery	Included under household expenses, wife claimed to be $1000 for R	$500
Transport*	$1,618	Paid for under the husband’s undertaking (school bus)
Medical /Dental* (Bupa card)	Unknown	Paid for under the husband’s undertaking
Extra-curricular activities / school activities	N/A	N/A
Entertainment / Presents	$10,000	$2,000-
Holidays	$25,000	$16,000
Clothes / Shoes	$10,000	$3,000
Insurance premium	0	Paid for under the husband’s undertaking
Lunches and pocket money for R	$15,000 (at $500/day)	$3,000
Other transport	For both A and R $1,000/day = $30,000	$2,000 And to be covered under respective allowance / living expenses from husband’s undertaking
Child minding	0	N/A
Uniform	$200	Paid for under the husband’s undertaking
Others: school trips misc school expenses	$2,000	$1,500
Others: A’s Deliveroo expenses	$9000	To be covered under allowance / living expenses from husband’s undertaking
Sub-total:	$113,318	$40,000

32.  I am mindful of the undertakings the husband had given with regard to the children’s expenses, which included their university tuition and school fees, their medical insurance, A’s rent and living expenses in the UK, and R’s School bus and monthly allowance.  In particular, I note that A has living expenses of $5,000 and R has an allowance of $4,000.

33.  I am taking the view that the money given by the husband for the children’s living expenses and allowance would cover items like ordering meals, transport, basic clothing items, pocket money, and what is awarded above is in addition to what the husband is paying on his undertakings. 

34.  I will also add here, that when the husband’s position is that there are not enough funds to pay for the family, wife’s contribution to parents and her horse betting expenses would not be a priority in a maintenance pending suit application.

35.  I will hold the husband to continue with the undertakings he had made.  On rounding the figures above, I will therefore make an order that the husband pays $51,000 to the wife and $40,000 for the two children.

Legal Costs Provision

36.  Between February to July 2019, wife had incurred an average of $63,321 per month.  For the following 12 months estimated up to FDR, she had projected an amount of $1,459,852, averaged to $121,654 per month. The wife seeks legal costs provision in the monthly amount of $120,000, and has via her counsel’s submission reduced the amount to $110,000.

37.  The projected costs were represented as follows, assuming there 12 months period before the FDR:

Item	Estimated Amount	Remarks
Solicitors	$759,852	$63,321 x 12 $63,321 being the average monthly charges in the previous 6 months
Barristers	400,000	1.  MPS $200,000 2.  FDR $200,000
Accountant	$300,000
TOTAL	$1,459,852
Average over 12 months	$121,654

The Law on Legal Costs Provision

38.  As far as the law on the funding of litigation costs is concerned, Currey v Currey [2006] EWCA Civ 1338 continues to be routinely applied in Hong Kong. This states inter alia that:

“the conditions for a ‘costs allowance’ are as follows:

(1)  That the applicant spouse has no assets, or none that can reasonably be deployed (at para [19], [20]).

(2)  That she can provide no security for borrowing, or none which can reasonably be offered (at paras [19], [20]).

(3)  That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation (at para [20] and see Sears Tooth, per Wilson J).

(4)  That she cannot secure publicly funded legal help ‘at a level of expertise apt to the proceedings’ (at para [20])”

39.  There is also a requirement to undertake an overarching enquiry

At para [20], Wilson J held that the initial, overarching enquiry should be into whether the applicant for a costs allowance could demonstrate that she cannot reasonably procure legal advice and representation by any other means. Therefore, to the extent that an applicant has assets (as in C v C), she has to demonstrate that they cannot reasonably be deployed (whether directly or as the means of raising a loan) in funding legal services …… Other factors may well come into play.  The subject matter of the proceedings would always be relevant, as would the reasonableness of the applicant’s stance in the proceedings.

40.  In the present case I accept that the wife has limited personal means of her own, as of the date of her Form E in May 2019, her liquid assets only amounted to $421,439.  She does not own any assets which she can deploy for legal cost.  It will not be possible for her to apply for any personal loan either as she would not be in a position to service them. Nor is it possible for her to offer a charge on the outcome of her litigation. Given the background of this case I do not think she should resort to public funds for her legal costs if there are sufficient resources from the family funds which I find there are.  I also believe it is unlikely, given the payment made by the husband, that she would be eligible for Legal Aid, nor is it feasible for her to pay for legal service by any other means.

41.  Looking at the husband’s disclosures to date, I have no doubt that the on-going legal process will be an arduous one, and wife needs to be funded for that purpose.

42.  However, I feel the litigation funding budget is lacking in detail, and in any event, the estimate provided is on the high side. I have deducted from the total budget the $200,000 claimed for MPS hearing which is no longer taking place, and reduced the amount for both solicitors and accounting generally.  On a broad-brush basis, I conclude that the husband shall pay a monthly sum of $55,000 as legal cost provisions to the wife’s legal representation to put her on a level playing field with the husband.

Costs

43.  The Husband had not disputed the wife’s allegation on how her resources had been curtailed prior to and over the course of the proceedings, he had left her with no option but to come to court to apply for maintenance, therefore necessitating this application.  I therefore make the Order for the Husband to pay for the cost of this maintenance pending suit and interim maintenance application, to be taxed if not agreed.

THE ORDER

44.  Upon the Respondent continuing with the undertakings previously given under the Order made on 10 September 2019:

1.  The Respondent shall pay maintenance pending suit to the Petitioner for herself in the sum of HK$51,000 per month and interim maintenance to the Petitioner for the two children of the family in the sum of HK$40,000 per month first payment to be made on the 1 May 2020 and thereafter to be paid on the 1st day of each succeeding month until further order.

2.  The Respondent shall provide litigation funding to the Petitioner of HK$55,000 per month the first payment to be made on the 1 May 2020 and thereafter to be paid on the 1st day of each succeeding month until the FDR or further order. It is further directed that these sums shall be paid directly to the Petitioner's solicitors on account of their costs.

3.  The First Appointment hearing shall be adjourned to the 1 September 2020 at 9:30am in Court No. 4.

4.  Both parties shall personally attend that hearing.

5.  There shall be an order nisi to be made absolute in 14 days’ time that the Respondent shall pay the Petitioner's costs of and occasioned by this application on a party and party basis to be taxed if not agreed.