CHJ v. LSR

FCMC 12018 / 2022

[2024] HKFC 223

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 12018 OF 2022

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J U D G M E N T

(TUITION/MPS)

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The Applications

1.  This Judgment deals with two applications:

(1)  The Petitioner/Wife’s Summons dated 30 May 2024 (“Tuition Summons”) seeking orders for the 1^st Respondent/Husband to continue to pay tuition fees and boarding costs and all other school-billed expenses relating to the attendance of their son, J, who is 16 years of age, at the S L School (“the School”), a boarding school in Canada, and to reimburse her for payments she has made for such expenses;

and

(2)  The Husband’s Inter-partes Summons dated 12 July 2024 (“MPS Summons”) seeking

(a)  interim maintenance of HK$5,650 to be paid by W to him for J’s ongoing expenses and a lump sum of CAD90,000 for J’s tuition fees at the School (para 1), and

(b)  that W pay to him HK$159,612 per month for his own maintenance pending suit including provision for his legal costs of HK$100,000 per month (para 2).

2.  On 19 July 2024 directions were given by Master WY Ho on the two Summonses and she made an “interim interim” maintenance order that H continue to pay tuition fees and boarding costs and all school-billed expenses of the School until the determination of the MPS Summons.

3.  The fee for international boarders at the School for 2024/2025 is CAD94,500. An Advance Deposit was billed on 21 March 2024 was paid by H. On 6 August 2024, following the interim interim Order of 19 July 2024, H wrote to the School asking for an extension to 4 November 2024 to pay the fees. The School granted an extension requiring 50% of the balance (CAD45,112.50) to be paid by 30 August 2024 and the rest (CAD45,112.50) by 15 November 2024.

4.  On 30 August 2024, H transferred HK$200,000 into the joint HSBC account he holds with W, and W then paid HK$197,905 = CAD33,000 to the School. The sum of CAD57,225 remains outstanding.

5.  Both W and H want J to stay at the School for the rest of his Secondary education. J is thriving there. His latest School report shows straight As. He is also keenly involved in sports at the School, particularly in its golf program.

6.  H has always paid for J’s education from when he attended kindergarten at the age of 4. J went to the Hong Kong Academy (“HKA”) for his Primary and Secondary education before he was enrolled in the School in Canada.

7.  W further says that when they discussed boarding school in 2022, it was never suggested by H that she should start to pay some of J’s education expenses. H’s response to this is to say that he did not ask W to contribute at the time, because he knew that she would refuse to do so.

8.  W says that there is no reason why H should not continue to be responsible for the cost of J’s education, at least through to his graduation from the School. J is currently in year 11, and his last year will be 2025-2026.

9.  The MPS Summons was issued by H largely in response to W’s Tuition Summons. H says that he had no choice but to do so, giving his poor financial situation. His case is he has no ability to pay the School fees, and he is in need of financial support from W to cover his own ongoing living expenses, together with legal costs to enable him to continue to instruct his current solicitors, and when appropriate, counsel, through to the FDR.

10.  H does not deny that he paid for all of J’s school fees and associated expenses in the past, but he says that, at least from 2016, he was spending money which was not his, to support the family including J. He claims that the money he was using actually belonged to his father (who died in 2019) and his mother, the Intervener, and that it was always held by him on trust. He says that when he told his mother (who lives in South Korea) about his use of her monetary assets, she was furious with him, and she instructed lawyers to demand that he cease all use of the moneys without her express permission, and, having been joined in the proceedings, she later secured a formal Undertaking (dated 4 April 2024 and filed in Court) to that effect.

11.  A significant aspect of these proceedings is the status of certain “disputed assets” held in H’s name (“Disputed Assets”). They include the following monies:

(1)  Money in H’s Shanghai Pudong Development Bank Account (“Pudong Account”) being rental income generated from two properties in Shenzhen.

(2)  An investment account with Credit Suisse AG Hong Kong (“CS Account”)

(3)  The sum of HK$15.8M, which H says was transferred by his late father in 2014 into the joint HSBC joint account.

12.  The two Mainland properties are held respectively by two companies, SS (China) Limited (“SS Ltd”) and WG (HK) Limited. In November 2021 the shareholding in SS Ltd was transferred by H to his sister. When W found out about the transfer, she filed a s. 17 Summons to set it aside and to join the sister as Intervener. After she was served with the papers, the sister transferred the shares to the mother. The s. 17 Summons was then amended to additionally seek the joinder of the mother in the proceedings. The mother did not object, and accordingly an order that she be joined as Intervener was made on 16 November 2023.

13.  The sister has resisted being joined, arguing inter alia that it is inappropriate for the Court to require her to be joined as a party, given that she is no longer the holder of the shares in SS Ltd. Argument on the potential joinder of the sister has been heard (also on 18 November 2024) and a separate Judgment will be handed down.

The Evidence

14.  The affirmation evidence has followed the usual format.

15.  On the Tuition Summons, W’s supporting (3^rd) Affirmation was responded to by H’s 2^nd Affirmation, and W filed an Affirmation (her 5^th) in reply.

16.  On the MPS Summons, H’s (1^st) Affirmation was responded to by W’s 4^th Affirmation and then H filed his 3^rd Affirmation in reply.

17.  Additionally, the hearing bundles contained two further affirmations of the Wife (her 1^st and 2^nd), relating to her application to join H’s sister in these proceedings.

18.  I have also considered the Forms E filed and exchanged in February 2023 and the written and oral submissions of counsel for both W and H. The Intervener was not required to attend the hearing, nor did she file any affirmation or submissions relating to the applications.

The Background

19.  W and H are from South Korea. They married there in October 2004, but have lived in Hong Kong since shortly after the marriage. During the marriage they lived comfortably. The FMH is a house of approximately 1,100 square feet, and with the benefit of a full-time helper. They enjoyed overseas holidays, multiple times per year, to Japan and other overseas destinations. They hold a club membership with HK Golf and Tennis Academy.

20.  W obtained a bachelor’s degree majoring in International Commerce and English Literature. She works for an investment bank in Hong Kong, a position she has recently commenced, in September 2024. Prior to that she was with another investment banking firm.

21.  W’s annual salary in her current job is HK$1,280,000 or about HK$106,667 per month. In her Form E she estimated her monthly expenses at HK$192,170, or HK$149,070 excluding J’s school fees. Her assets include significant bank savings of HK$4,888,190 (as at February 2023) although she said in her evidence that this has diminished somewhat due to having to draw on her savings to pay expenses including legal fees. Her Form E list of expenses included HK$25,000 per month for legal fees, but that was before Orders were made for the Intervener to be joined, and for consequential directions for the filing of formal pleadings. I accept that her legal costs are significantly higher than $25,000 per month.

22.  H, who is 51, is a managing director of his own company, LI Limited (“LI”), which is involved in the sale of household products and operates an online shopping mall. He also has a bachelor’s degree, from a university in South Korea, and studied for an MBA at the University of Hong Kong.

23.  H says LI has performed poorly in recent years, including having been affected by the Covid pandemic.

24.  H’s expenses at the time of his Form E in February 2023, were stated to be approximately HK$105,710, including J’s School fees. This has now been revised by him to HK$159,612 for General and Personal expenses including HK$100,000 per month for legal fees, plus J’s expenses at HK$48,398 including the component of HK$42,748 per month for the School fees.

The Law

25.  Sections 3 and 5 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”) provide the Court with an ability to make orders for maintenance pending suit and interim maintenance for children. By Section 3 the Court upon a petition for divorce may 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 … as the court thinks reasonable.” Section 5(2)(a) states that the Court may make an order that “a party to the marriage shall make to such person as may be specified in the order for the benefit of a child of the family, or to such a child, such periodical payments and for such term as may be so specified.” Such orders may be made in divorce proceedings “before or on granting the decree of divorce, of nullity of marriage or of judicial separation, as the case may be, or at any time thereafter”: s 5(1).

26.  The approach to be taken by the Court upon applications for maintenance pending suit and interim maintenance is set out in HJFG v KCY [2012] 1 HKLRD 95:

“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 Judge, in TL v ML [2006] 1 FLR 1263, 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:

(a) The sole criteria to be applied in determining the application is “reasonableness” which is synonymous with “fairness”

(b) A very important factor in determining fairness is the marital standard of living. That is not to say that the exercise is merely to replicate that standard.

(c) 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.

(d) 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.”

27.  In cases involving claims for ancillary/financial relief, including for interim orders, both parties are under a duty to ensure that the Court is provided with sufficient information as to their financial resources. This is a continuing duty and is not confined to information provided by Forms E and Answers to Questionnaires: GW v RW (Financial Provision: Departure from Equality) [2003] 2 FLR 108 at §17 (Mostyn J).

28.  HJFG v KCY also involved a claim for legal costs provision. Later in his Judgment, Mr. Justice Hartmann JA (as he then was) set out the correct approach to such claims, drawing from the eponymous English authority of Currey v Currey:

(1)  First, (at §78), Hartmann JA noted the fundamental requirement that the Court must be satisfied any contribution towards the costs of the claiming party is reasonable, and this requires the Court to be supplied with a breakdown of anticipated costs and assess the reasonableness of such costs.

(2)  Secondly (at §80 citing Wilson LJ in Currey), the overarching enquiry initial inquiry should be into

“… whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means. Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services.”

(3)  Thirdly, (at §81), Hartmann JA (again referring to Currey) noted that satisfying that condition alone “may not be sufficient. In the broad exercise of discretion, a judge may consider that other factors must come into play:

“The subject matter of the proceedings will surely always be relevant; and, insofar as it can safely be assessed at so early a juncture, the reasonableness of the applicant’s stance in the proceedings will also be relevant.” ”

(4)  Fourthly, “The period over which an allowance for legal costs was to be paid was also considered by Wilson LJ to be a factor of considerable relevance. Applicants should not therefore expect that an order that the allowance be paid until the final determination of all proceedings will be the inevitable order. It was observed that if the application for an allowance for legal costs was made before the FDR hearing, it may well be wise to order that the costs allowance should fund the applicant only up to that hearing.” (at §82)

Discussion

A.  The Budgets

29.  Neither W nor H raise any issue on the quantum of the School fees or the other expenses billed by the School.

30.  H estimates that in addition to the School’s annual tuition/boarding fee, J’s monthly expenses in Canada are approximately HK$4,600 per month. I have examined the relevant exhibits, including LSR-1-7 to his 1^st Affirmation, and this figure would seem to be broadly correct. The additional amounts billed by the School include regular monthly fees for transportation and health/medical (CAD75 each), and other charges for trips organized by the School, and sporting clinics.

31.  H supplied an updated breakdown of his current monthly expenses (H’s 1^st, §16):

My expenses

Item	Amount (HK$)
Accommodation	7,500
Meals out of home (as I do not have an equipped kitchen)	15,000
Transport	3,000
Clothing/Shoes	1,000
Personal grooming	800
Entertainment/Presents	1,000
Holiday	1,500
Medical/Dental	500
Tax	1,000
Loan repayment (excluding business loans for LI in the sum of HK$21,983.40	28,312
Legal fees	100,000
Total:	HK$159,612 (HK$59,612 if excluding legal fees)

J’s expenses

Item	Amount (HK$)
School fees	42,748 (CAD90,000 per year)
Extra tuition fees	500
School books and stationery	500
Extra curricular activities	1,000
Entertainment/presents	500
Holidays	500
Clothing/Shoes	500
Insurance premia	500
Transport	500
Uniform	150
Total:	HK$48,398

32.  Excluding legal costs and J’s School fees, H’s monthly costs are HK$65,262.

33.  H moved out of the FMH at the end of October 2023, and is currently staying in what he described as an old apartment with other occupants and which entails the sharing of bathroom and other basic facilities.

34.  The amounts expended by H on accommodation and meals out were criticized by W. She says that, assuming it was reasonable for H to move out of the FMH, there is no reason he could not have moved into his sister’s flat in Bel-Air in Cyberport which has been left vacant for many years and is only used by the sister upon her occasional trips to Hong Kong. H responded to this by saying this was not possible; that it is his mother’s apartment (I take that to mean that while it is held in the sister’s name, it belongs beneficially to the mother/Intervener) and that the Intervener refuses to allow him to stay there because of his unauthorized use of the Disputed Assets.

35.  For the purpose of assessing his claim to MPS, I am prepared to accept most of the expenses listed are legitimate and truly reflect his current recurring needs and obligations, and that his expenses are in the vicinity of between $55,000 to $60,000 per month, excluding legal costs and School fees.

36.  H expects to incur a further HK$1,901,978 in legal fees under the FDR, of which he has only been able to pay HK$1,077,305 so far. The Court was provided with a breakdown of this figure, and this includes some costs for past work, and costs attributable to the hearings on 18 November 2024. Overall, I consider H’s estimate of $100,000 per month to be a reasonable one, if a little high, given the extent of the work already carried out including in relation to the issues surrounding the Disputed Assets.

B.  H’s Capacity to pay tuition/capability of meeting his needs

37.  H makes three main points in support of his contention that he does not have the capacity to pay and that he needs financial support from W, two aspects on which the success of his opposition to the Tuition Summons and his MPS Summons substantially depend:

(1)  He has no income. He says LI is trading at a loss, and he has no other sources of income.

(2)  He can no longer use the Disputed Assets, without the Intervener’s express permission, which is unlikely to be forthcoming.

(3)  He has no other financial resources, and it is not feasible to expect him to go further into debt.

H’s business

38.  LI was set up in 2011. H says it has not broken even since its inception. He says that he had hoped the company would be profitable so that he would be able to repay some of the money used from the Disputed Assets, but this has not been possible.

39.  Financial Statements for LI for four years ended 31 December 2020 to 31 December 2023 were produced. The first of these shows a non-current liability, being an amount due to a director (i.e. H) of HK$4,644,052 for the financial year (calendar year) 2019. Over the subsequent calendar years, this has decreased, confirming that H has been repaid the following amounts by the company:

2020	HK$1,497,689
2021	Nil
2022	HK400,000
2023	HK$1,100,000

i.e. an average of HK$749,422 per year over the four-year period.

40.  LI’s revenue increased from HK$807,546 in 2019 to HK$3,900,719, with an increase in gross profit of HK$1,650,015 and a net profit for 2020 of HK$590,131, a considerable turnaround from a loss of HK960,748 the year before. The company has continued to show net profits for the subsequent years through to 2023.

41.  According to the latest 2023 Financial Statement, the amount owed on the director’s loan is HK$1,646,363. Cash in bank held by LI is insufficient to pay that off: HK217,510, but if the trend for the past four years is an indication, LI represents a financial resource to H in that there is a reasonable expectation of further payments to H by repayment of the director’s loan and/or the possibility of dividends being declared.

H’s access to the Disputed Assets

42.  The second key element of H’s argument on the Summonses is that he can no longer look to the Disputed Assets to support himself and pay for J’s fees.

43.  In his Form E dated 3^rd February 2023, H said in respect of the Pudong Account and the CS Account:

(Note. The account belonged to my father. Prior to this passing in 2019, my father transferred the account to me so that I could manage it on behalf of my mother. I have no interest in the monies held therein, they belong solely to my mother.)

44.  As noted, pursuant to the Court’s Order dated 16 November 2023, the Intervener was joined in these proceedings. Pleadings have been filed. The Amended Points of Claim filed 5 June 2024 set out the Intervener’s case on the Disputed Assets. It is the Intervener’s pleaded case that the late father, due to various factors including his ill health, arranged for assets to be transferred to H and to the sister for them to manage, with the intention that they be held by H and the sister on trust for the father and the Intervener, and that after the father’s death, the assets would belong to the Intervener absolutely (Amended Points of Claim, para 16).

45.  H’s Amended Points of Defence filed 7 June 2024 support the Intervener’s pleaded case.

46.  W’s Amended Points of Defence filed 7 June 2024 disputes the Intervener’s case. Inter alia, W pleads that the transfers to H were of the legal and beneficial title to them: in other words, they were gifts by the father, and they were not and are not held by him on trust for the father and Intervener (Amended Points of Defence, §§18 – 20).

47.  The Intervener has completed the process by filing Points of Reply.

48.  Although it is not possible to decide without a Trial the issue of the beneficial ownership of the Disputed Assets, Mr. Eugene Yim for W submitted, nonetheless, that for the purposes of the present applications the Court was entitled to take a preliminary view of the matter and decide that it is likely H will continue to be able to access the Disputed Assets, and that they should therefore be regarded as a financial resource for the purposes of the Tuition Summons and MPS Summons.

49.  Mr. Yim referred the Court to N v L [2013] HKFC 91. That case involved an application by the wife to set aside certain transactions made by the husband including the transfer of a trading business, HFL. The business has previously belonged to the husband’s father, who had, due to ill health, transferred the business to the husband, who then ran the business. Following separation, the husband made interim payments of maintenance but ceased these payments and then transferred the business to a third party, staying on as an employee. In response to the wife’s MPS application, the husband said that did not have the ability to pay, and could no longer use the funds of the business after it had been transferred.

50.  HH Judge KK Pang conducted a careful analysis of the way in which the business continued to operate much as before it was purportedly transferred. At §35, he concluded:

“It is the Wife’s position that the Husband is still the beneficial owner of HFL. The parties’ contention on the beneficial ownership of HFL will be substantively dealt with in the Wife’s s. 17 application. It is inappropriate for the Court to make a fact finding in this respect in an MPS application. However, the Court is entitled to take a preliminary view on the matter, approaching the issue on a “broad brush”. Having carefully considered all evidence now presented before me, for the time being I am prepared to accept that even after the alleged transfer of HFL, the Husband has continued and probably will continue to have access to the funds and resources of HFL so much so that he can use its funds for his personal uses.”

51.  Counsel for H, Mr. Cristian Tsang agreed that this passage correctly states the law, namely that the Court is entitled to take a preliminary view as part of the broad-brush approach on such applications.

52.  W stresses the following points as relevant to such an assessment:

(1)  That H’s access to the Pudong Account and CS Account involved withdrawals over many years. H himself said that these withdrawals – some of which were for investment purposes but many were to support the family – amounted to approximately HK$23,488,333 (H’s 1^st, §7);

(2)  Even after the Petition was filed, H paid for J’s education expenses;

(3)  It was only in May 2024 that H decided to stop paying for J’s expenses including the School fee. This was several months after the Intervener had been joined and after the Points of Claim and Points of Defence (which were later Amended) were filed.

53.  W exhibited to her 3^rd Affirmation an email sent by H to her on 17 November 2023, which set out H’s proposed “split” of the expenses that he and W would be responsible for going forwards:

Husband	Wife
Husband’s Credit Card (Red) J’s School Fee, School Expense J Bank Debit Card, Bank Account Electric, Water, Gas Internet (Red), Home Phone Car (License, Maintenance, Tunnel, etc)	Wife’s Credit Card (AE, Visa Signature) Helper Salary Taikoo Car Park, Car Fuel HKGTA Monthly Fee, Topup J Shopping (Amazon, Clothing, etc)

54.  W says the date and contents of this email are significant. First, it was sent in November 2023 despite H’s claim that the funds in the Disputed Accounts belonged to the Intervener. Second, that this constituted a promise to pay all of J’s education costs notwithstanding the mother’s claim, and despite the fact that the mother had been joined as Intervener the day before.

55.  In his affirmation (his 2^nd) in response, H commented on this email:

“… I must clarify that the representations made therein was on the basis that I would be financial capable to do so. Should there be a change of circumstances causing me to no longer be able to afford those items, I would have no option but to accept the reality and request financial aid from the Petitioner in supporting J’s expense. Furthermore, I offered to pay for J’s school fees and school expenses without actually assessing my ability to do so. I said so because I wanted to secure J’s education as best I could.”

56.  This is a less than convincing response. It is difficult to accept that H wrote the email, setting out the items he proposed that he should be paying in the future, without considering carefully his future ability to pay them, whether from funds coming from LI, use of the Disputed Assets or from other sources. Although part of the email is in Korean, W confirmed that there is nothing in it to the effect that H’s promise to pay the items set out in his column of the chart were conditional on him being able to meet them, and that if he could not, then W would have to step in and pay them herself.

Are there other resources reasonably open to H?

57.  As noted above, the Intervener has secured an undertaking by H that he will not use the CS Account and the Pudong Account. The undertaking, dated 2 April 2024 was readily given by H, without any consultation with W before doing so. It is in these terms (with appropriate modification for anonymity and abbreviation)

“I, LSR, do hereby undertake that (1) I will not withdraw funds from CS Account and Pudong Account unless with express instructions from the Intervener, and (2) I will provide to the Intervener monthly updates with supporting documents of the CS Account and Pudong Account, including but not limited to details of all deposits and withdrawals and monthly statements.”

58.  With the permission of the Intervener, H has accessed the CS Account funds since the Undertaking was given. On 23 October 2024 his solicitors (Haldanes) wrote to CCBH to request to borrow HK$100,000 for the fees of counsel for the hearings on 18 November 2024, and HK$322,213.08 to pay the balance of the School fees. He proposed that once he was able to sell the HKA debenture, worth some HK$400,000, he would repay the loans.

59.  On 24 October 2024 CCBH responded, confirming the Intervener was prepared to give express authorization for H to withdraw HK$100,000 from the CS Account.

60.  For the purposes of assessing financial need and capacity, the Court is entitled to consider a party’s ability to borrow money, and whether a party can look to relatives who historically have provided financial support. In DX v LN (FCMC 7870/2014, unrep, 21 September 2015) HH Judge Chan decided an application by a wife for MPS and legal costs provision, and as part of his ruling considered whether financial support provided by the husband’s parents. At §76, having considered the leading case of KEWS v NCHC [2013] 2 HKLRD 314, the Judge asked whether, after the divorce, “would his parents then love him any less and therefore cease or withdraw all such financial assistance that they have been providing him all these years? I simply do not believe so.”

61.  In KEWS v NCHC, then Chief Justice Ma set out the relevant test to be applied in cases involving third party support:

“36. In every case where third party assistance is involved, there are two critical evidential questions for the court to consider:

What is the extent of the financial assistance provided by the third party to the husband or wife?

What is the likelihood of such financial assistance continuing in the foreseeable future?

37. It goes without saying that in the fact finding exercise, the court must look at the reality of the situation and have regard to matters of substance and not just form. In looking at reality, the court can take into account not only what a party actually has, but also what might reasonably be made available to him or her if a request for assistance were to be made. In O’D v O’D [1976] Fam 83, which involved the court taking into account the financial support given to the husband by his father, Ormrod LJ said at p.90D – E: “In making this assessment the Court is concerned with the reality of the husband’s resources, using that word in a broad sense to include not only what he is shown to have, but also what could reasonably be made available to him if he so wished.”

38. In addition, in looking at what may occur in the foreseeable future, past conduct is often a useful guide …

39. Having ascertained the extent of the financial assistance provided by the third party and then finding on the evidence on a balance of probabilities that there is a likelihood of the continuation of such financial assistance in the foreseeable future, the court is then in a position in law first to take this into account in the identification of the financial resources of the parties and secondly, in determining the appropriate ancillary relief to be granted. This is an approach that is entirely consistent with the court’s duty under s. 7(1) of the MPPO. Needless to say, the outcome in any given case is inevitably fact-sensitive.”

62.  Of course, KEWS v NCHC was an appeal from a final judgment on an ancillary relief claim, and here the Court is considering applications for interim financial orders. Nevertheless, as part of the broad-brush assessment, the Court is entitled to consider whether in this case H can look to the Intervener for financial support.

63.  The question then becomes whether, if H were to request additional access to the Disputed Assets, it is reasonable to expect that the Intervener would grant such a request.

64.  In my view the answer to this question is Yes.

65.  First, the balances of the CS Account and Pudong Account are considerable. According to H’s Form E, the January balance of the Pudong Account was HK$6.73M (CNY Time Deposit) + HK$2.575M (CNY Savings). I was told at the hearing that the CS Account is now worth in excess of US$10M (approximately HK$77,800,000).

66.  Secondly, it is relevant that when H asked for funds to brief counsel the Intervener responded positively, and quickly. It is likely, I find, that she would be receptive to requests by H for further support in respect of his ongoing legal costs. He is supportive of her claim to the Disputed Assets, and will give evidence accordingly. It is important that he continue to be represented.

67.  Thirdly, in respect of the School fees, the Intervener has not granted H’s request for a loan to cover the balance of the 2024-2025 School fee, but at the same time, she has not refused it. If she had already made up her mind to reject H’s request for the additional HK$322,213.08, the letter from CCBH dated 24 October 2024 could have easily said so. In my view it is significant that it did not.

68.  In this respect, the purposes of future requests by H for financial assistance are relevant to the assessment of whether they are likely to be favourably considered by the Intervener. In respect of School fees, is it likely that the Intervener would grant a relatively modest further advance (modest when compared with the overall value of the Disputed Assets/Accounts) for the purpose of supporting the ongoing education of her grandson at least for the remainder of his Secondary schooling? I think that it is.

69.  I have not ignored H’s current level of indebtedness to banks and other individuals which is not insubstantial. In the Form E of February 2023 H disclosed only modest, a balance of $90,480 owing on credit and charge cards. Since then, partly as a result of the “freezing” by the Intervener of the CS Account and Pudong Account, H says he has been forced to take out bank loans which total HK$968,000, and to seek additional loans from friends for a further HK$408,076, in addition to the loan from the Intervener of $100,000.

70.  At the same time, while I accept that H will need to service the bank loans, I do not accept for the purposes of assessing his financial position, that the loans from friends and from his mother will require ongoing instalment payments or that they will demand immediate repayment by H.

71.  W’s position is that these loans are all part of a self-engineered litigation strategy designed to portray H as impoverished, purely for the purpose of the proceedings including the current applications.

72.  Having considered the matter, I am satisfied that H is in a better position financially than he has attempted to portray and that he has the financial ability to meet his own expenses, including legal costs, and J’s expenses, from income from the business LI whether that is booked as repayments of the director’s loan to LI or a dividend or other remuneration, and from further support from the Intervener by permitted access to the Disputed Assets.

73.  For H, Mr. Tsang took me to some correspondence between solicitors relating to the possible adjournment of both the Tuition Summons and the MPS Summons. He argued that W wrongly refused an offer from H that both applications should be adjourned sine die to enable further mediation to take place.

74.  On 9 August 2024 Haldanes wrote an open letter to CRS saying, inter alia

“… Given that our client aims to settle the Boarding School Fees before the substantive arguments hearing on 18 November 2024 solely in compliance with the [Order of 19 July 2024], we believe that you client’s immediate concern has been addressed by the impending payment of the Boarding School Fees by our client.

For the purpose of saving costs and in light of the fact that the parties have to consider mediation (as per the Order dated 23 May 2024), as a showcase of our client’s goodwill and genuine intention to settle the matter, we propose to adjourn sine die both of our clients’ respective applications … with costs reserved.”

75.  On 13 August 2024 CRS wrote back, rejecting the proposal.

76.  The difficulty with Mr. Tsang’s submission is two-fold. First, further mediation was attempted between those letters and the hearing on 18 November 2024, but this was unsuccessful. Second, the offer to adjourn sine die did not address the question of the School fees for next year, i.e. 2025-2026, which will fall due to be paid in or about May 2025.

77.  Mr. Tsang argued, separately, that given H’s parlous financial situation, it was fair and just that W be required at least to contribute to J’s School fees. He accepted that if H was granted the Orders sought on the MPS Summons, this would necessitate W dipping into her bank savings, i.e. she could not meet such expenses from her income alone, while at the same time meeting her own regular expenses/J’s expenses. I will address this in my concluding remarks.

78.  Mr. Tsang further argued that, although N v L correctly states the law in entitling the Court to form a preliminary view of the merits of a TL v ML-type claim, the Court should not form any such view on the facts of this case. I agree, and my conclusion that H has the financial resources sufficient to meet J’s educational costs including the School fees and to meet his own ongoing expenses is not based on any such preliminary view of the question of who holds the beneficial interest in the Disputed Assets, or that H will be able to access the CS Account and the Pudong Account without seeking permission from the Intervener to do so.

79.  I stress that I have not based my decision on any finding that H’s stance in these proceedings, including in supporting the Intervener’s claim, is unreasonable and that this should be taken into account as one of the factors counting against his claim for legal costs provision. If the Intervener succeeds in demonstrating that some or all of the Disputed Assets are hers, beneficially, then it would follow from this that the position H now takes, including supporting the Intervener’s claim, is reasonable.

Conclusion

80.  Accordingly, my conclusion is that H has sufficient resources to meet his own needs and to pay for J’s schooling. Taking all matters into account, including the past history of H meeting all of J’s educational expenses, it is reasonable for him to continue to do so. I do not consider that, on an interim basis, W should be responsible for part of the School fee and other billed expenses for this year or 2025-2026. This matter can be revisited at an FDR or failing settlement, at Trial.

81.  On W’s Tuition Summons, there will be an Order in terms of paragraph 1 and 2 of the Summons.

82.  As the Petitioner has succeeded on the Tuition Summons, I see no reason why she should not be awarded her costs of the same. I repeat that in my view it was not unreasonable for her to decline H’s suggestion for both this and the MPS Summons to be adjourned sine die. The CMH has been listed for April 2025, and the fees for J’s final year at the School will be payable in or about May 2025. Absent an agreement brokered with or without the assistance of mediation, an adjournment of the Tuition Summons would not have addressed who would pay the School fees for 2025-2026. Accordingly, there will be an Order in terms of paragraph 3 of the Tuition Summons, with certificate for counsel.

83.  The Respondent’s MPS Summons is dismissed, with costs to the Petitioner and a certificate for counsel.