WW v. LLN formerly known as LSM

FCMC 4996/2018

[2019] HKFC 188

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 4996 OF 2018

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

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1.  This is a hearing of the respondent wife (“the wife”)’s application for maintenance pending suit (“MPS”) against the petitioner husband (“the husband”).

Parties’ Respective Position

2.  In her summons dated 30 January 2019, the wife asked for the following payments from the husband:

(1)     MPS for herself in the sum of $120,000 per month commencing from 1 March 2019 until further order of the court;

(2)     Litigation funding in the sum of $50,000 per month commencing from 1 March 2019 until further order of the court;

(3)     MPS in the lump sum of $1,536,000 being backdated payment for the period from January 2018 to February 2019; and

(4)     Costs.

3.  The husband’s stance is that he has been paying, and he will continue to pay:

(1)     The younger son’s tuition fees and also his pocket money;

(2)     The salary of the domestic helper; and

(3)     The recurring expenses of the former matrimonial home (which is currently occupied by the wife and the younger son) such as management fee, rates and government rent.

However, he is of the view that there is no ground in awarding MPS to the wife herself and therefore, her application for MPS should be dismissed with costs.  In other words, the husband has made no offer for any direct payment to the wife as MPS.

Background

4.  The parties were married in 1993.   The divorce petition was taken out by the husband in 2018 and therefore, this is a long marriage of about 25 years.

5.  Within wedlock, 2 children were born:

(1)     The elder son is now aged 25, who is self-supporting and living apart; and

(2)     The younger son is now aged 23, who has already completed his first university degree and is now residing with the wife at the former matrimonial home.

According to the wife, the younger son is now enrolled in a part-time Master program in Biology with the University of Hong Kong.

6.  The husband issued a petition for divorce on 27 April 2018 based on behaviours, which was disputed by the wife.  The parties have now come to an agreement that the divorce petition would be proceeded with on the fact of separation. 

7.  On 30 January 2019, the wife issued her summons for MPS which was disputed by the husband.  At the call-over hearing on 13 March 2019, I gave directions for the MPS application to be dealt with on papers.  I now proceed with the adjudication on the wife’s MPS applications after receipt of their documents and written submissions.

Preliminary Points

8.  Solicitors for the husband raised 2 preliminary points which I think can be conveniently dealt with first.

9.  By reading Ms Yue (counsel for the wife before her Notice to Act in Person being filed on 3 July 2019)’s submissions, she referred to the wife’s applications for MPS under section 3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“MPPO”) and for interim maintenance for the younger son under section 5 of the same Ordinance.

10.  It has been rightly pointed out that the wife has only made an application for her own MPS in the summons, but not for interim maintenance for the younger son. Therefore, leaving aside the issue on whether the husband still has a duty to maintain the younger son in view of his age and the fact that he has already completed full time education, the interim maintenance of the younger son is a non-issue, as far as this application is concerned.

11.  Moreover, there can be no doubt that the court only has jurisdiction to make a MPS Order beginning not earlier than the date of the presentation of the petition for divorce (which was 27 April 2018 in this case).  Therefore, the wife’s application for MPS to be backdated to January 2018 is totally misconceived.  I agree that the husband’s argument in this regard must be right.

The Law on MPS

12.  The Court’s power to grant a MPS order in favour of a spouse is governed by s.3 of MPPO:

“3. Maintenance pending suit in case of divorce, etc.

…..

the court 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 or making of the application and ending on the date of the determination of the suit, as the court may think reasonable.”

13.  In HJFG v KCY[1], Hartmann JA, at paragraphs 37 and 38 of the judgment, gave a succinct summary of the law in this area by referring to the judgment of Mostyn QC, sitting then as a Deputy Judge of the High Court in England, in TL v ML [2006] 1 FLR 1263, 1289:

“37. The principles that have been 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 criterion 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. This 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 assumption 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 application for interim maintenance, when the amount to be paid is for a limited period only and not all 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.”

14.  Therefore, the overriding considerations for such applications are reasonableness and fairness.   In order to achieve these objectives, the Court has to balance the reasonable needs of the applicant and the ability to pay of the respondent on an interim basis: LJ v LWHH [2003] 3 HKC 455 at 461D.

15.  In undertaking this balancing exercise, the Court will adopt a broad brush approach, and not a detailed investigation of the financial positions of the parties.

16.  I do not think the above general principles are in dispute.

The wife’s financial circumstances

17.  The wife is now 57 years of age.   In her supporting affirmation, the wife frankly admitted that she came from a wealthy family, but said that she had never depended on her maiden family financially.  She said she had operated a pharmaceutical company in the Mainland which was once worth more than HK$60,000,000.  Unfortunately, the business ran into problem and the company was suspended in 2012.  The wife claims that she now owes a debt of over HK$23,000,000.

18.  As far as her current business venture is concerned, the wife is now operating a small food supplement company, which is still in its developmental stage and therefore, has not been generating income or profits for her.

19.  In her affirmation, the wife affirmed to the fact that the husband was a very successful businessman who used to pay her a monthly maintenance of $120,000, comprising bank transfer of $70,000 and settlement of credit card expenses in a sum of about $50,000 per month.  She further averred that the family used to have overseas holiday trips 10 times a year, spending an annual amount of about $300,000 in that regard.

20.  As far as the wife’s monthly expenses are concerned, they were set out in paragraph 11 of her supporting affirmation (Bundle A-1/11) as follows:

General	Amount (HK$)
Food for family	20,000
General household expenses	2,000
Car park rental	3,180
Mobile and internet charges	3,070
Domestic helper salary	5,500
Renovation fees for the
matrimonial home	18,369
Personal
Meal out of home	30,000
Transport	2,000
Clothing/Shoes	10,000
Personal grooming (including
wigs, haircut, facial & body
treatment, cosmetics and gym etc.)	10,000
Entertainment/Presents	10,000
Holiday	20,000
Medical expenses (including
herbal doctor)	19,003
Supplements (including herbal
medicine)	20,980
Insurance premiums for myself	23,557
Contribution to parents	5,000
	202,659

21.  As the husband had used to pay her about $120,000 per month as maintenance, the wife now asks for a MPS order in the same amount.

22.  In addition, the wife also asks for a monthly sum of $50,000 as litigation funding to enable her to continue instructing solicitors to represent her in these proceedings.

23.  Finally, as the husband has started to pay her the monthly sum of $18,000 as maintenance from March to October 2018, instead of the usual sum of $120,000, the wife had to resort to her savings and had obtained loans from friends and relatives. She has also accumulated credit card bills and is now owing various credit card companies the sum of about $373,908.  Therefore, the wife also asks the husband to pay back the monthly maintenance owed to her as a backdated MPS in the lump sum of $1,536,000 ($120,000 x 14 - $144,000 = $1,536,000) for the period from January 2018 to February 2019.   At the time of counsel’s written submissions, the backdated sum has now increased to $2,136,000 as calculated from January 2018 to July 2019 (§32 of counsel’s written submissions).

The husband’s financial circumstances and his case

24.  The husband is now 56 years of age.  He is a company director and is engaged in the trading of heath food.

25.  I note from neither the husband’s affirmation in opposition (Bundle A1/19-25), nor his solicitor’s written submissions, there is any claim that he is not in a financial position to pay the MPS as claimed.  In other words, the husband’s ability to pay is not a central issue in this application. 

26.  At the same time, I also note that there is no evidence, nor claim from the husband that the wife is having a good income source.  Instead, the husband’s main objections are that the parties have already agreed on the separation of their finances long ago and there have never been any regular payments of $120,000 from him to the wife as maintenance.  Furthermore, the husband also questioned the reasonableness of the monthly expenses as claimed by the wife.  

27.  In view of these, I will not venture into a very detailed discussion on the husband’s finances here.  Instead, I will focus on the objections as raised by the husband in his affirmation and in his solicitor’s submissions.

Reasonableness of the wife’s expenses

28.  In the husband’s affirmation in opposition, he objected to the reasonableness of the following items in the wife’s list of expenses:

(1)     Food for the family $20,000

(2)     Meal out of home $30,000

(3)     Clothing/Shoes $10,000

(4)     Personal grooming $10,000

(5)     Entertainment/Presents $10,000

(6)     Holidays $20,000

29.  I note that after the husband has raised these objections, the wife in her affirmation in reply (§12 of the affirmation, Bundle A1/30) reiterated that the family used to enjoy a very comfortable standard of living and therefore, there is nothing unreasonable on the quantum on those items.  Apart from this bare assertion, the wife did not provide any other proof on the quantum of those expenses.

30.  On the face of it, I agree that those amounts as put forward by the wife seem very high.  As I have stated earlier, we are here to deal with the MPS application of the wife only, but not that of the younger son.  I have difficulty in accepting the wife’s expenses as claimed based only on her bare assertions. Doing the best as I could, I would say a sum of $15,000 for food ($7,500 for food at home and $7,500 for meal out of home); $5,000 for clothing; $5,000 for grooming; $5,000 for entertainment; and $5,000 for holidays are reasonable in the interim period.

31.  There is a claim for renovation costs of the former matrimonial home.  I do not accept that they are necessary expenses in the interim period. 

32.  As for the medical expenses, the wife claims for the monthly sum of $19,003.  I note that the wife has enclosed some receipts as exhibits (Exhibit LPQ-7) (Bundle B1/147-209).  I have some reservation on whether some of those expenses were really necessary.  For example, many of the receipts were in respect of the nursing of the right shoulder (右肩護理) but those receipts were not issued by a registered medical practitioner.  Many receipts were issued by a Chinese herbalist for bone setting wherein the diagnosis include the conditioning of the body (調理身體).  I have some doubts on whether these so called medical expenses can all be justified.  In the circumstances, I think a monthly sum of $5,000 is more reasonable.

33.  As for recuperation, there is no objective evidence to suggest that the wife’s consumption of birds’ nest and Ophiocordyceps sinensis are justified. Likewise, I will only allow $5,000 for recuperation.

34.  As for the carpark, my understanding is that the wife does not own a car at this very moment and therefore, the renting of a car park may not be justified, at least in the interim period.  However, I note that the wife only claims $2,000 for transportation, which seems a bit low.   Therefore, I would transfer this car park rental of $3,000 to the item of transportation making it a total monthly sum of $5,000.

35.  For insurance premiums, this is an area where there is not much evidence in support. According to the wife, she is paying a monthly sum of $23,557 for the insurance premium.  If one should look at her Form E (Bundle A1/45), she only has one policy at the HSBC which was described as Life Insurance (壽險計劃). Judging from this description and the relatively large monthly premium payable, it is likely to have a saving/investment element in it.   A MPS payment should normally be used towards a party’s immediate needs but should not be used in the building up of his or her savings or capital.  I am not satisfied this sum should be included in the wife’s MPS claim.

36.  As to the item of contribution to parents.  It is the wife’s case that she came from a wealthy family.  Her inclusion of this item in her MPS budget is unreasonable and cannot be upheld.

37.  Overall speaking, I am satisfied that the wife’s interim reasonable monthly needs amount to:

General	Amount (HK$)
Food for family	7,500
General household expenses	2,000
Car park rental	Not allowed
Mobile and internet charges	3,070
Domestic helper salary	5,500
Renovation fees for the
matrimonial home	Not allowed
Personal
Meal out of home	7,500
Transport	Increased to 5,000
Clothing/Shoes	5,000
Personal grooming (including
wigs, haircut, facial & body
treatment, cosmetics and gym etc.)	5,000
Entertainment/Presents	5,000
Holidays	5,000
Medical expenses (including
herbal doctor)	5,000
Supplements (including herbal
medicine)	5,000
Insurance premiums for herself	Not allowed
Contribution to parents	Not allowed
	$60,570

38.  After doing the above calculations and arrived at the figure of $60,570, I would take a step back and look at the general picture again.  We are here talking about a spouse whose accommodation needs have already been catered for (the wife is living in the former matrimonial home rent free) and if she is to be given a further monthly sum of about $60,000, I am satisfied that that should be enough for her monthly needs, at least in the interim period pending the full trial of her ancillary relief application.

Did the husband pay $70,000 and make available $50,000 credit card spending to the wife in the past?

39.  One facet of the wife’s submissions is that the husband had been paying her a monthly sum of about $120,000, by ways of $70,000 in bank transfer and $50,000 by way of credit card spending.  On that basis, she asks for this sum to be paid as her MPS.

40.  The husband did not deny that some previous bank transfers were made but they were not towards the wife’s maintenance.  He said there had been some payments of $70,000 but they were loans to the wife to pay the insurance premiums. 

41.  I note that the wife’s evidence (§9 of her supporting affirmation, Bundle A2/9) refers to a lump sum payment of $420,000 made by the husband on 1 February 2017.   She described this as “For 6 months’ monthly maintenance from January to June 2017”.   In other words, it is her evidence that in February 2017, the husband has paid her monthly maintenance in advance for the months from March to July 2017.  This is a highly unusual way for the payment of monthly maintenance.  I accept that this looks more like a loan, or at least something other than the payment of “monthly maintenance”.

42.  As to the credit card payments, the husband explained that the $50,000 was “company credit card limit” but not expenses to the wife (§6(ii) of the husband’s 3^rd Affirmation, Bundle A2/21).  I have some difficulty in understanding the husband’s evidence in this regard.  It seems that the husband has no dispute that the wife was once given a credit card issued by his company and the credit limit of that card was set at $50,000.  After considering his evidence in this regard, I accept that the husband had once provided the wife with a company credit card for her use up to a monthly credit of $50,000.

Challenges to the wife’s financial situations

43.  According to the husband, the wife failed to explain the whereabouts of her assets including funds in her HSBC account that amounted to about $3,140,000 as at 22 April 2017.   

44.  I have gone through the bank statements of the wife (Bundle B1/89-125 and 305-346).  It is true to say that in the statement dated 22 April 2017, the balance of the wife’s HSBC Savings Account was $3,140,606.82, whilst the overall integrated balance (i.e. including Current and Foreign Currency Accounts) was $3,151,416.83.  For the following months, the balance started to decrease and by 23 January 2018, the overall integrated balance came to $1,480,205.29.  When it came to 23 January 2019 (Bundle B1/338), i.e. shortly before the MPS application, the account was in the debit of $193,480.74.   In other words, the balance has decreased by about $3,350,000 over a period of 21 months.  That was on average, about $160,000 per month.  That was not a small sum of money by any standard.  However, we have to bear in mind that it was the wife’s case that she used to spend about $202,659 a month on her maintenance (the wife’s Form E, Bundle A2/54) and that would have explained why her accounts were depreciating at such a rate over that period of time.  Therefore, I do not accept the husband’s complaint that the wife had failed to explain the whereabouts of the balance.  

45.  Having said this, I also have to remind myself that I have already ruled in §§37-38 above that the wife’s interim reasonable needs should be about $60,000 per month and therefore, as from now on, I would expect the wife to live by that budget instead of going back to her former mode of spending which is not regarded as reasonable in the present circumstances of this case.

46.  There was also a submission (§11 of husband’s solicitors’ Skelton Submissions) that the wife had maintained a total relationship balance from $7,917,442.42 (as from November 2016) to $4,684,803.84 (as in February 2019) in her HSBC Account.   There is no explanation or submission on what that actually mean.  I only note that on 23 January 2019 (Bundle B1/338), the wife had a negative balance of $193,480 in her HSBC Account.

Litigation funding

47.  It is the wife’s case that the husband should provide interim provisions for her legal costs in the sum of $50,000 per month. 

48.  The husband’s objections include:

(1)     No detailed breakdown of anticipated costs;

(2)     Unreasonable conduct in proceedings; and

(3)     No evidence that the UK Property under the wife’s name is on trust for the children and therefore could not be used for raising legal funding.

The law

49.  In H v H (Interim Maintenance) [2007] HKFLR 311, HH Judge Bruno Chan (at paragraph 44 of his judgment) cited the English Court of Appeal case of Currey v Currey [2006] EWCA Civ 1338 as follows:

“44. There is no question over the court’s jurisdiction to award a costs allowance in an order for maintenance pending suit subject to certain fairly stringent conditions, as recently refined by the English Court of Appeal in Currey v Currey [2006] EWCA Civ 1338, [2007] FLR as follows:

(1) That the applicant has no assets, or none that can reasonably be deployed.

(2) That she can provide no security for borrowing, or none which can reasonably be offered.

(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation.

(4)     That she cannot secure publicly funded legal help at a level of expertise apt to the proceedings.”

50.  Again, I do not think the above legal principles on legal costs allowance are in dispute.

Discussion

Costs Estimation

51.  I note from Ms. Yue (Counsel for the wife before she filed her Notice to Act in Person)’s Skeleton Submissions, a Form H was enclosed in which a breakdown of the wife’s costs estimation was provided.  Therefore, it is not entirely correct to say that there is no breakdown of the wife’s anticipated costs.

52.  As one would note from the said Form H, the wife has so far incurred legal costs of $238,000 up to 13 June 2019.  From then to the FDR hearing, the estimated costs are $353,000 and thereafter to the ancillary relief trial, another $335,000 in costs is anticipated.  In other words, the wife’s legal costs estimation for her whole case in ancillary relief is $926,000, which I find to be quite reasonable.

Unreasonable Conducts

53.  The husband’s another objection is that the wife has caused delay to the proceedings by failing to file her Form 4 and Answers within time; refusing to give undertakings in respect of the husband’s injunction application; refusing to agree to the husband’s application for amendment of the heading of the proceedings.

54.  I note that all these complaints are unrelated to the ancillary relief proceedings.  They are matters relating to the main suit or the injunction application.  Whether the wife was justified to take those actions may be subject to debate which should properly be left to another occasion.  But in any event, they should not be relied upon to deny the wife’s application for litigation funding.

The use of UK Property to raise litigation funding

55.  Another objection by the husband is that there is no evidence that the wife’s UK Property is held by her on trust and therefore could not be used to raise litigation funding. 

56.  We are still in the early stage of the litigation.  According to the wife, the UK Property which is registered in her name in fact belongs to the 2 children.  That may or may not be true.  But at this stage of the litigation, it may be premature to say that the wife must fail in that claim.  Therefore, I do not think it would fair to deny the wife’s application for litigation funding before there can be any ruling on the beneficial ownership of the UK Property.

57.  After considering the husband’s objections, I am of the view that they could not succeed in denying the wife’s application for litigation funding.   After all, we all understand that the court will only adopt a broad brush approach and if there should be contrary findings after a full trial, a proper adjustment in the final ancillary relief order can always be made.

58.  As to the quantum of litigation funding, I cannot say that the amount claimed is in any way unreasonable.  Therefore, I will allow an order for litigation funding in the monthly sum of $50,000 which should be paid to the solicitors acting for the wife direct.

Backdating of MPS

59.  The wife asks for the backdating of the MPS Order to January 2018.  As I have already indicated in §11 above, at least part of this application is misconceived.  The issue now is whether I should grant the MPS Order as from the date of the presentation of the Petition for Divorce (27 April 2018) or from the date of the MPS application (30 January 2019).

60.  After giving some thoughts to this issue, I am of the view that the MPS Order should begin from the date of the application.  I come to this decision because there is no doubt that before that date, there were still funds in the wife’s HSBC Account being spent by her at a rate of about $160,000 per month.  That should have covered her monthly expenses and legal costs before that date.  Therefore, the granting of MPS and litigation funding should only start from the date of application.  For the sake of convenience, I will fix the payment date of MPS on the 1^st day of every month.

Orders

61.  Based on the above reasons, I hereby make the following orders:

(1)     The husband shall pay MPS in favour of the wife in the sum of $60,000 per month on the first day of every month, starting from 1 August 2019 until further order of the court;

(2)     The husband shall pay MPS by way of litigation funding in the sum of $50,000 per month on the first day of every month starting from 1 August 2019 until further order of the court and such payment should be paid directly to the firm of solicitors representing the wife to cover her legal costs in this case; and

(3)     The husband shall pay a lump sum of $660,000 to the wife within 14 days from the date of this order to cover the MPS and litigation funding as from 1 February 2019 to 1 July 2019.

Costs

62.  Costs to follow event.   The wife has to come to court before she could get the above orders and therefore, she should also get the costs of this application, including all costs reserved, with certificate for counsel, such costs to be taxed if not agreed.   This will be in the form of a costs order nisi to be made absolute after the expiry of 14 days from the handing down of this judgment. 

[1] [2012] 1 HKLRD 95