YKC v. LMYT

FCMC 9062 / 2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 9062 OF 2015

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

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1.  The Petitioner husband and the Respondent wife will be referred to as “H” and “W” respectively.

2.  By the Summons dated 20 August 2015, W applied for maintenance pending suit (“MPS”) and legal costs provisions for herself.  By the Order dated 14 October 2015, it is ordered that H shall pay W HK$6,500 per month as an interim measure to settle her urgent needs. After trial, by the Judgment dated 11 January 2016, it is ordered that H shall continue to pay the monthly mortgage repayment of the former matrimonial home and Shop 9 and shall pay W HK$6,500 per month until further order of the court.  It is also ordered that, in addition to the above payments to be made by H, 60% of the net income received by the 2^nd Intervener from the rental income of Shop 9 shall be applied to W’s MPS, until further order of the court.

3.  This the hearing of W’s Summons dated 4 August 2016 for variation up of the monthly periodical payments payable by H to W, and legal costs provisions.

4.  The background of the parties has been set out in the Judgment dated 11 January 2016: see paragraphs [2] to [3].  The legal principles in relation to an application for MPS and legal costs provisions have been set out in the said Judgment: see paragraphs [4] to [6].

5.  W’s present application to vary is made pursuant to s 11 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) (“MPPO”), s 11(7) of which provides that:

“In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of the matters to which the court was required to have regard when making the order to which the application relates …”

6.  The Court considers W’s application to vary on the basis of the means of the parties as they stand at the time when the case is before it and that the principles governing the assessment of periodical payments will in broad measure apply to the applications to vary: the overriding objective is fairness.  See Ch 14.9 Rayden andJackson on Relationship Breakdown, Finances and Children, Issue 1, September 2016.

7.  By the Judgment dated 11 January 2016, I have found that, for the determination of W’s MPS application:

(1) Interest in monies against which the 1^st Intervener (W’s mother) and the 2^nd Intervener (a limited company that the parties each holds 50% share) might have a claim, were not to be counted as being available for W’s immediate needs.  This included (a) the HK$2 million transferred by W to the 1^st Intervener, (b) 40% of rental income from Shop 9, and (c) 100% of the rental income from Metro Harbour View: see paragraphs [11] to [12].

(2) W’s reasonable monthly expenses were HK$33,747 – HK$8,350 = HK$25,397 per month: see paragraphs [11] to [14]. 

(3) W would be able to meet her reasonable monthly expenses with 60% of the rental income from Shop 9 and the interim MPS that H was paying, i.e. HK$31,800 X 60% + HK$6,500 = HK$19,080 + HK$6,500 = HK$25,580 per month: see paragraphs [14].

(4) W could work and, if and when she worked, she would be much better off: see paragraphs [13], [15] & [18].

(5) H’s monthly income was at about HK$110,000 to HK$120,000: see paragraphs [16].

8.  The parties do not gainsay my findings in the above.

9.  For the present application, W relied on “change of circumstances” in relation to the following matters:

(1) She has been unable to secure employment;

(2) She has lost the rental income from Shop 9; 

(3) H’s income has been improved;

(4) She was impoverished, having had to go into debts to meet her living expenses and to fund the legal costs of these proceedings, but has exhausted her borrowing abilities.

10.  W has sent out job applications without success.  She argued that despite her greatest efforts, she was unable to secure any form of employment during the last year.  It is however noted that the positions sought by her were mostly executive level and directorate level employments.  It is aptly suggested by H that probably W should start to look for less glamourous positions such as clerk, secretary, private tutor, cashier, waitress or salesperson.  My findings on W’s ability to work are set out in the paragraph 13 of the Judgment dated 11 January 2016. She is in the age of 37, healthy, well educated and experienced in work, has no need to take care of any child or elderly.  Despite her allegation to the contrary, given her young age, good health, education and work experience, I maintain the view that there is a good chance for her of getting a job that can make a monthly income of no less than HK$10,000.  Despite W’s argument to the contrary, I take the view that there has been no material change of the circumstances in W’s prospect of employment

11.  The tenant of Shop 9 moved out on 30 June 2016.  Since July 2016, W has received no rental income as part of her MPS.  W submitted that on that ground alone, this Court should adjust the MPS payable by H to W upwards in order to make up for W’s loss of rental income, i.e. HK$19,080.  W has put up Shop 9 on the market for letting since May 2016.  On the one hand, W said that possibly Shop 9 could not be let out because of the lack of repairs and reinstatement.  W has obtained a quote of HK$74,500 for the works needed.  No such works have been carried out.  On the other hand, she said she had been informed by estate agents in the neighbourhood and verily believed that it would be difficult to find a new tenant as the current economic condition was poor and there was little demand for premises like Shop 9 in the area.  On the contrary, H said he was informed by property agents that, as Shop 9 was located near to the new Ho Man Tin MTR Station and it was suitable for many kinds of businesses, it would be easy to find a new tenant if W asked lower rents instead of HK$30,000.  For my part, without proper supporting evidence, I am not prepared to accept sweeping statements such as that the current economic condition is poor, that there is little demand for premises like Shop 9 in the area or that it will be easy to find a new tenant if W reduces the asking rents.  I shall put no weight on those statements.  Having reviewed the said invoice produced by W, I also take the view that the lack of the repairs and reinstatement works as described in the quotation should not prevent the property to be let out.  Despite that Shop 9 is still vacant and both parties have not adduced proper evidence on the current rental market of comparable shops in the neighbourhood, in view of the fact that Shop 9 had been rented out for HK$31,800 per month, I consider it is too pessimistic to presume that Shop 9 cannot be let out within a reasonable time.  On the evidence before me and doing the best I can, I shall deal with W’s present application on the basis that Shop 9 will be rented out for more or less of the previous rentals in the next 6 months.

12.  W has lost the rental income from Shop 9 since July 2016, and I have taken the view that, in the worst case scenario, she might continue receiving no rental income in the next 6 months.  In the premises, I should consider whether an order should be made to adjust upward H’s MPS so as to look after W’s needs in the next 6 months. Such consideration involves two questions: (a) whether W can work for income to make up the loss of the rental income from Shop 9 and (b) H’s ability to pay.  About the above question (a), I have taken the view that she can get a job that can make a monthly income of no less than HK$10,000.  It is always my view that it is not unreasonable to expect her to work for income that covers her living expenses.

13.  H’s ability to pay was an issue argued and canvassed in the 1^st MPS application: see paragraphs [16] to [17] of the Judgment dated 11 January 2016.  It was my finding that he earned averagely about HK$110,000 to HK$120,000.  For the present purpose, say it is HK$115,000 per month.  It is accepted by the parties that, since then, his income has been moderately increased to HK$125,000 per month.  I take the view that H is in a position to afford extra HK$10,000 per month for the next 6 months.

14.  W should be able to make her ends meet with the extra HK$10,000 per months payable by H during the next 6 months, and her earnings from work and the rental income from Shop 9 in the future.

15.  To sum up, in relation to her application for upward adjustment of the MPS payable by H, it is ordered that H shall pay extra HK$10,000 per month in the next 6 months.

16.  I now turn to her present application for legal costs provisions.  W used to borrow from the 1^st Intervener to meet her legal costs.  Despite W’s argument to the contrary, I have found that such financial assistance from the 1^st Intervener would continue if requests for assistance were to be made.  In view of that the limited means currently available to the parties, I have found that W could borrow from the 1^st Intervener to meet her need for legal costs.  W now suggests that since the 1^st MPS application, the 1^st Intervener has expressly stated that she would no longer extend any loans to W for, among other things, the reason that she has had her own legal battle to fund.  W has transferred over HK$2 million from her two bank accounts to the 1^st Intervener and has withdrawn HK$421,800 from the 2^nd Intervener’s bank account and has paid the said sums to the 1^st Intervener.  The issues of the beneficial ownership of said HK$2 million and HK$421,800 are to be dealt with in the preliminary issues, and I have ruled that interest in monies that the 1^st and 2^nd Interveners might have a claim were not to be counted as being at W’s disposal for her immediate needs.  However, with the said HK$2 million and HK$421,800 in her pocket, the 1^st Intervener should have no difficulty in funding W’s as well as her own legal costs.  Having carefully considered all circumstances, I do not accept W’s bare assertion that she is now unable to borrow from the 1^st Intervener.

17.  By the Judgment dated 11 January 2016, I have accepted that W does not have the immediate means to meet her legal costs.  I however have also found that H’s reasonable monthly expenses have exceeded his monthly income, so that he did not have the means for legal costs provision, too.  In the 1^st MPS application, W has suggested that H should borrow personal loans from the bank to meet W’s request.  In the present application, to fund her legal costs, W suggested that H could re-mortgage the former matrimonial home to obtain further loan of about HK$700,000.  It is accepted by the parties that, to do the re-mortgage, H is required to pass the stress test.  W said H could pass the stress test, based on her calculation of H’s income and his liability as the borrower of the mortgages of the former matrimonial home and Shop 9.  In her calculation, W did not take into account of H’s liability as the borrower of Metro Harbour View.  H said that he could not pass the stress test because, besides his liability for mortgage repayment of the former matrimonial home and Shop 9, his liability for Metro Harbour View would be counted in the stress test, despite that the monthly mortgage repayment of Metro Harbour View has been paid by its rental income.  I accept that probably H’s liability as the borrower of the mortgage of Metro Harbour View will be counted in the stress test, but it is unclear whether the rental income from Metro Harbour View will be counted in as well.  Despite that she did not agree with H’s calculation, W has not produced evidence to show that more likely than not her calculation is the one that the banks will use.  In the circumstance, W, who argued that H could obtain further mortgage loan to fund her legal costs, has failed to prove her argument.  In any event, it is worthy of noting that I do not consider that it is fair to compel H, whose reasonable monthly expenses have already exceeded his monthly income, to get into further debts to meet W’s present request.  

18.  The trial of the preliminary issues regarding, among other things, the beneficial interests in Metro Harbour View and Shop 9 that were registered in the name of the 2^nd Intervener will take place in less than 3 months’ time, i.e. in April 2017, with 6 days reserved.  H said the 100% of the beneficial interests of Metro Harbour View and Shop 9 were family assets while W was saying that the 1^st Intervener was the 40% beneficial owner of Shop 9 and 100% beneficial owner of Metro Harbour View.  If W loses in the preliminary issues, 60% of Shop 9 will still be counted as family asset, and it is beyond dispute that the former matrimonial home, a 1,276 sq. ft. apartment in an upmarket residential area in central Kowloon, registered in the name of H, is family asset.  W will have a share in the family assets.  On that note, I take the view that, probably, W can be covered by a Sears Tooth arrangement in respect of her legal costs with the solicitors.

20.  By reason of the matters aforesaid, it is ordered that:

(1) In addition to the MPS payable under the Order dated 11 January 2016, H shall pay W HK$10,000 per month for 6 months, the 1^st payment to be made on 14 March 2017 and thereafter on the 14^th day of each succeeding month until payment;

(2) W’s application for legal costs provisions be dismissed. 

21.  It is ordered nisi that the costs of this application be reserved.  The order nisi becomes absolute 14 days after this order is made unless a party has applied to the court for varying the order