TLWM v. KDM and KJMC, the Executrices of the Estate of KMC, Deceased

FCMP 100/2020

[2021] HKFC 99

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FAMILY COURT MISCELLANEOUS PROCEEDINGS NO. 100 OF 2020

____________________

____________________

___________________

DECISION
(Interim Financial Provision under Cap 481)

___________________

1.   By Originating Summons filed on 4 August 2020, the Applicant claims for herself reasonable financial provision to be granted from the estate of the Deceased (“Estate”) pursuant to Section 4 of the Inheritance (Provision for Family and Dependents) Ordinance, Cap. 481 (“IPFDO”).

2.   By this Summons also filed on 4 August 2020, the Applicant seeks interim provision to be paid out of the Estate pending determination of the Originating Summons, and for “interim” interim provision pending determination of her claim for interim provision.

3.   On 27 November 2020, HHJ CK Chan directed that the Applicant’s claim for interim provision be dealt with on paper by a deputy judge. No interim relief pending determination was granted. 　

Relevant Background

4.   The Applicant was born in 1949 and is now 72 years old. The Deceased was born in 1925; he passed away in September 2019 at the age of 94.

5.   The Applicant met the Deceased in 1968 and they developed a close relationship. The Applicant was then 19 years old; the Deceased was then 43 years old and was already married.

6.   In 1973 the Applicant was married to her late husband. A son was born to the marriage in 1981, now aged 40 (“the Son”).

7.   Following the death of the Applicant’s late husband in 1987, the Applicant and the Deceased’s relationship significantly developed. The relationship between and among the Applicant, the Deceased and the Son is described by the Applicant as loving, financially supportive and has the signs of a usual “family”.

8.   The Deceased died with a Will. Under the Will dated 23 January 2018, neither the Applicant nor the Son is named a beneficiary.

Applicable Law

9.   The Court’s power to make interim orders is set out in Section 7 of  IPFDO.

"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.”

10.  Section 5 of IPFDO sets out the matters which the court will consider when exercising its powers under section 7:

“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.

…….

(5) Without prejudice to the generality of paragraph (g) of subsection (1), where an application for an order under section 4 is made by virtue of section 3(1)(viii) or (ix), the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to the extent to which and the basis upon which the deceased assumed responsibility for the maintenance of the applicant, and to the length of time for which the deceased discharged that responsibility.

(6) Without prejudice to the generality of paragraph (g) of subsection (1), where an application for an order under section 4 is made by virtue of section 3(1)(ix), the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection and subsection (5), have regard to the closeness of the relationship between the applicant and the deceased immediately before the death of the deceased.

(7) In considering the matters to which the court is required to have regard under this section, the court shall take into account the facts as known to the court at the date of the hearing.

(8) In considering the financial resources of any person for the purposes of this section the court shall take into account his earning capacity and in considering the financial needs of any person for the purposes of this section the court shall take into account his financial obligations and responsibilities.

11.  In granting an order for interim provision under section 7 of  IPFDO, the applicant must be able to overcome 3 hurdles: ACLS v HSB(T)L[2013] 5 HKC 92 [2013] 2 HKLRD 444 at [36] quoting from Barnsley v Ward (unrep., Eng CA, 8 January 1980) by Templeman LJ:

(a)   First, she must show that she is in immediate need of financial assistance;

(b)   Secondly, that there is property forming part of the estate which is or can be made available to meet the need; and

(c)   Thirdly, she must satisfy the court that it is right in the circumstances to exercise the court’s discretion and make an order in the manner sought.

12.  On the first requirement of ‘immediate need of financial assistance’:

(a)As to the immediacy, it was held in ACLS v HSB(T)L at [41] that

“There is an element of flexibility built into the concept of ‘immediate need’ which makes it an appropriate test to be adopted under s.7(1)(a) which is universally applicable. In some cases, the urgency of the need is relevant for determining whether there is an immediate need of financial assistance. In other cases, it is not so much a matter of urgency as opposed to a matter of the seriousness of the consequences of not dealing with the need that calls for immediate attention.

(b) It requires a very clear case for immediate need of financial assistance to be shown. As held in ACLS v HSB(T)L at [38] & [39]:

“38. With the above analysis of the statutory scheme in mind, we can now turn to the requirement in s 7(1)(a) on ‘immediate need of financial assistance’…If the financial needs of an applicant can be met by his own financial resources or had been met from other sources, he would not be regarded as having an immediate need for financial assistance.”

“39 …interim maintenance should only be granted (at a stage where the actual entitlement of a claimant has yet to be established in a very clear case where the immediate need of financial assistance is shown.  Since there is no obligation on the part of a claimant to repay (subject to conditions to such effect being imposed and the resources of the claimant to meet such conditions), there is a real risk that the beneficiaries of the estate may suffer a detriment if at the end of the day the Court held at the trial that such claimant was not entitled to any relief.”

Discussion

Was the Applicant maintained by the Deceased?

13.As set out in section 3(3) of IPFDO, a person shall be treated as being maintained by the deceased, either wholly or substantially, as the case may be, if the deceased, otherwise than for full valuable consideration, was making a substantial contribution in money or money’s worth towards the reasonable needs of that person.

14.Although the Respondent disputes a relationship of financial dependence, there is clear evidence that to a great extent and for a long period of time even up to the time closely before his death, the Deceased has assumed responsibility for the maintenance of the Applicant.

15.  In addition to the Deceased spending substantially on the Applicant when they were together e.g. meals out, shopping, gifts, entertainments or activities, the Deceased also made frequent advancements to the Applicant by cheques. Cheques given between 2013 to May 2019 are listed out as follows:

Year	Number of cheques	Total (HK$)
2013	17	2,350,000
2014	14	2,000,000
2015	14	3,050,000
2016	11	1,710,000
2017	13	2,100,000
2018	17	4,700,000
2019 (until May)	6	2,080,000
Total		17,990,000

Is there property forming part of the Estate which is available to meet the Applicant’s need?

16.The Deceased came from an affluent family and was related to the family’s large enterprises. The Schedule of Assets and Liabilities revealed sizeable assets in the Estate. There is no real concern that the Estate will be insufficient to meet the claim of the Applicant while also providing for the beneficiaries under the Will. However, irrespective of the size of the Estate, the issue is whether the Applicant is entitled to it.

Core issue for determination

17.The core issue for determination is whether the Applicant can demonstrate that she is in immediate need of financial assistance.

18.The Applicant’s proposed financial need at this interim stage is HK$105,240 (general expenses at HK$20,326 and personal expenses at HK$84,914) per month. The substantial expenses on meals out of home, shopping, entertainment and jewellery etc commensurate the high standard of living the Deceased has provided her with.

19.However, the Applicant’s own evidence shows clearly her financial strength. As set out below, the total value of her assets　comprising two landed properties, cash, shares and loan receivables amount to around HK$40 million. These are all acquired from the Deceased.

20.In 1980, the Deceased purchased a property for the Applicant at East Point Road, Causeway Bay, Hong Kong (“East Point Road　Property”). The East Point Road　Property is registered in the Applicant’s sole name; it has no mortgage and its market value is HK$8 million. The Son has been residing here since 2015.

21.In 1987, the Deceased purchased another property for the Applicant at Conduit Road, Mid-Levels, Hong Kong (“Conduit Road Property”). The Conduit Road Property is also registered in the Applicant’s sole name; it has no mortgage and its market value is HK$30 million. The Applicant has been residing here since 1988.

22.  The Applicant has cash in her bank accounts; her position is HK$ 851,006.61 in Hang Seng Bank as of 29 January 2021 and HK$97,351.04 in HSBC Bank as of 12 January 2020. She also has shares valued at HK$246,800.

23.  In March 2020 which is shortly before the Applicant took out the Originating Summons and this application, there were two advances made to the Son, including HK$ 1 million for settling renovation-related costs on her behalf, and HK$1.05 million to pay for the Son’s Hong Kong Jockey Club membership fee and a racehorse in accordance with the wish of the Deceased.

24.  The Respondent submitted that these　were　mere attempts to ring-fence or dissipate her assets.  Although this factual dispute is not to be determined at this stage, even on the Applicant’s own case, the Son has to pay her back a surplus sum of HK$450,000.

25.Section 5 of IFPDO clearly requires the Court to consider the financial resources of an applicant in granting both final and interim provisions. In other words, it is envisaged that an applicant would rely on her existing financial assets to finance her life. Therefore, it is utterly wrong for the Applicant to assert that to deal with her properties is in effect to ‘take back all the gifts and efforts by the Deceased’. There is no basis to exclude what she has been given by the Deceased and to have her expenses paid out from the Estate.  The alleged promises and/or wishes of the Deceased (even if proved) are irrelevant to the claim under IPFDO.

26.As the sole owner of two properties, there are different ways the Applicant can generate income in order to finance herself.

27.First of all, it is unjustified that the Son should continue to occupy the East Point Road　Property. The Son is a grown man and a high achiever; he is a licensed medical practitioner and is now serving as a clinical assistant professor at a Hong Kong public hospital. As a professional with considerable income, and that he already kept the proceeds of GBP 206,500 from the sale of a UK property in 2017, the Son should be financially independent and more than capable in renting a place of his own.

28.If the Applicant moves to the East Point Road Property, she can either sell the Conduit Road Property at HK$30 million or to rent it out. It is an apartment of 1,300 sq ft on the mid-levels, so it can generate a handsome rental income.

29.Alternatively, if the Applicant stays at the Conduit Road Property, she can sell the East Point Road Property for HK$8 million and at the same time arrange for a reverse mortgage of the Conduit Road Property to further generate monthly income.

30.It is noted that the Applicant is suffering from depression and adjustment disorder as a result of the Deceased’s death. However, there is no suggestion that she is therefore incapable of making the necessary financial arrangement. If needed, the Son can render the necessary assistance.

31.The Applicant’s omission and refusal to generate any sort of income from her assets is unreasonable. As the Respondent submitted, any alleged immediate need of financial assistance of the Applicant is nothing but self-created.  An ‘immediate need of financial assistance’ under section 7 of IFPDO must have meant a genuine need, rather than a self-created one.

32.  Therefore, I find that the application failed on the first hurdle. The Applicant failed to establish that she is in immediate need of financial assistance such that the court would exercise its discretion in her favor.

Conclusion

33.It is ordered that :

(a)   the Summons filed on 4 August 2020 be dismissed; and

(b)   there be costs order nisi that the Applicant do pay the Respondent’s costs of the application in any event, on party and party basis, with certificate for counsel, to be taxed if not agreed;

34.Unless there is an application within 14 days to vary, the nisi order on costs shall become absolute.