DL, EP v. K, ME

FCMC 507 / 2020

[2020] HKFC 111

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 507 OF 2020

(formerly FCMC 1299 of 2019)

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

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Introduction

1.  This is an application by a Petitioner wife for maintenance pending suit/litigation funding pursuant to section 3 of the Matrimonial Proceedings and Property Ordinance Cap 192.

2.  The wife’s summons is dated the 10 September 2019 and was originally listed for hearing on the 31 January 2020. Unfortunately, this hearing was caught by the “GAP” and as a result, on the 27 February 2020, the following memo was sent to both sides respective solicitors:    

The aforementioned case was listed for a Maintenance Pending Suit/Litigation Funding hearing at 11:00 am on the 31 January 2020 and was adjourned due to the general adjournment of the court proceedings [“GAP”] which was announced by the Judiciary because of public health considerations arising out of Covid-19.

On reviewing the matter, it seems that it should be possible to deal with this matter by means of a paper disposal.

With this is mind the court shall make the following order nisi, to be made absolute on the 6 March 2020, in the event that no valid objections to the following course of action is received.

It should also be noted that if objections are raised and are then found to be without merit that the court may take this account when exercising its discretion on costs.

Please note that any objections and submissions may be filed at court by using the no reply e-mail address (fcj02@judiciary.hk).

  Order nisi

1) The Petitioner’s summons dated the 10 September 2019 shall be determined on paper.

2) Both sides shall file and serve a short submission in relation to the same on or before the 20 March 2020.

3) Leave be granted for both sides to file and serve a short Reply, if so advised, on or before the 27 March, such Reply submission to be no longer than 5 A4 pages in length and typed in 14 font and double spaced. 

3.  Both sides complied with these directions. The difficulty, however, is that the wife’s affidavit evidence and her claim for maintenance pending suit, is based on her residence in Hong Kong, whereas in reality she and her eldest daughter N are currently residing in the Philippines. No evidence has been filed with respect to her current needs. It is said that she wishes to return to Hong Kong to live but it is not clear how feasible that is given the fact that the Philippines is now in a lock down. In the meantime, the husband continues to live and work in Hong Kong and to support the other children of the family, namely S, who is a child of this marriage and and the wife’s second daughter by her first marriage, D.

4.  There are also other issues concerning in particular the enforceability of a pre-nuptial agreement and claims that the wife entered into this marriage bigamously. The wife also alleges material non-disclosure on the part of the husband, whereas the husband for his part accuses the wife of bad faith. It is his case that the parties should comply with the terms of the pre-nuptial agreement.

5.  In such circumstances it is only possible for the court to approach this application on a very broad brush basis, pending further updated evidence being filed, to include documentary evidence in support of the wife’s current expenditure. It is the husband’s case that his finances are extremely tight and that he cannot afford to pay the wife anything. It is also of note that the alleged pre-nuptial agreement makes it clear that it is only concerned with the division of capital and not with any claims for maintenance. In that context the contents of paragraph N should be noted. This states as follows:

N.  This agreement is intended, in the event of termination of the Marriage, to restrict the right of Mr. K and Miss d L to make any claim for a transfer of property order, lump sum or any other claim of a capital nature against any property owned by either of them or the Trust. For the avoidance of any doubt it is not intended in the event of termination of the Marriage that this agreement should restrict Miss d L’s right or the right of any of their children, to make any claim for maintenance from Mr. K.

Maintenance pending suit and litigation funding are, of course, claims for maintenance. 

The current issue

6.  The current issue to be determined then is how much should the husband pay to the wife as interim interim maintenance, if anything at all? Further should the husband also pay a contribution towards the wife’s legal costs as litigation funding?    

Background 

7.  The parties met in Hong Kong and married on the XX February 2007. They had both been married before. The husband is British and he has two children from a previous marriage, who do not reside with him. The wife for her part is Filipina and she also has two children from a previous marriage, N who is now aged 20 and D who is 18. The wife brought both girls to Hong Kong about 7 years ago and they have resided with the parties since then. In addition, the parties had S, who was born on the 2 September 2006 and is now 13 years of age.

8.  The husband is in the insurance business and from 2012 – April 2019, the wife worked as a property agent and then from May 2019 for Jardine Airport Service. It is not known if she is currently working in any capacity in the Philippines. It is not disputed that the husband was largely responsible for all of the family expenses during the marriage.    

9.  The husband maintains that the parties entered into a pre-nuptial agreement prior to the marriage, with a view to safeguarding the relative positions of all of the children involved. It is his case that the wife took the only executed copy with her. He has only been able to produce an unsigned copy.

10.  It is also his case that the parties came to an amicable agreement but that this fell apart when the wife registered a lien against the matrimonial home. 

The law

Maintenance pending suit

11.  The law is well known and not in dispute. Section 3 of the Matrimonial Proceedings and Property Ordinance Cap192 states that the only governing principle is that the court shall make such order as it considers reasonable in all of the circumstances of the case. Consequently, applications such as these are approached on a broad-brush basis. As I have said above, in this instance the court will approach the matter on a very broad brush basis and also on an interim interim basis. A detailed examination of the parties’ means may be examined at a later date at a full ancillary relief hearing if there is no agreement in the meantime, when there is then every opportunity to achieve fairness by means of set off. In other words, if there is any overpayment or underpayment that can normally be rectified at a final ancillary relief hearing. Further the issue of interim financial support may be considered again once the additional evidence is to hand. In considering matters of this nature, the court is generally concerned with establishing the standard of living of the parties and the ability of the paying part to meet the payments to be made. In so far as it is possible the court will also endeavour to try to look at the reality of the situation and will try not to simply accept the bare assertions made by one or other of the parties.

How much maintenance should the husband pay to the wife as maintenance pending suit for herself on an interim interim basis?

12.  In essence the wife’s case is that the husband should pay her HK$25,100 per month as set out in her letter dated the 22 May 2019 as exhibited to her 2^nd affidavit dated the 23 August 2019 as follows:

Without prejudice to her claims and pending final resolution of financial matters our client requests monthly payment of maintenance pending suit from your client as follows: -

(i) Rent	HK$ 15,000.00
(ii) Electric	HK$ 1,200.00
(iii) Water	HK$ 600.00
(iv) Phone	HK$ 300.00
(v) Food	HK$ 5,000.00
(vi) Miscellaneous	HK$ 3,000.00
Total ..	HK$ 25,100.00

The above is the minimum our client needs in the short term.  She also requests that these payments be backdated to 1^st February 2019.

13.  As I have said, these estimates are based on the wife’s alleged expenses in Hong Kong. It is not known what her current expenses are in the Philippines. This point is further developed by the husband’s counsel in her Reply submission dated the 27 March 2020 where she states as follows:  

Wife’s Departure from Hong Kong

2.   The Wife’s Submissions state that “At present the Petitioner has had to locate herself in the Philippines because she is unable to maintain herself in Hong Kong as her job at the airport has effectively ceased given the drop-off in visitors to Hong Kong consequent on the civil disturbances and the corona νirus” [Wife’s Submissions/§13].

3.   We therefore have no information as to when she lost her job, whether she resigned or was made redundant nor when exactly she returned to the Philippines.  Presumably though, she has given up her flat in Tung Chung and, that being the ease she currently has no expenses in Hong Kong.  Further, there is no evidence as to what her expenses in the Philippines are.  Given the current situation worldwide caused by Co-vid19, it is unlikely that she will return to Hong Kong in the near future.

4. Whilst it is accepted that the court adopts a ‘broad brush’ approach when dealing with applications of this nature the fact is there is now no evidence of expenditure, given that there has been a significant change of circumstances since the Wife’s 4th Affidavit was filed on 31 December 2019.  It is submitted that expenses cannot and should not be presumed where there is no evidence of such.

With respect I tend to agree, although clearly the wife must have some expenses in the Philippines.

14.  Further it is not known whether the wife is currently working or where she and the elder child N are living. However, she does say that she has no income and that her gaming business in the Philippines is not currently operating, although previously it earned about HK$2,000 per month net. She also owns a property in the Philippines that was originally rented out for HK$3,000 per month, although this rental was paid annually. It is not clear what the present situation of this property is.

15.  The husband maintains that the wife has an earning capacity, but whilst that is true given the current situation it may be difficult for the wife to exploit this to the full. She does therefore need some form of financial support in the immediate to short term in order to tied her over. As I have referenced above, it is of note that even on the husband’s case this is not precluded by the pre-nuptial agreement.    

How much does the husband earn and what are his other financial resources?

16.  It is the husband’s case that he currently earns the equivalent of GBP8,000 per month and that he is significantly in debt. To that end I accept that he has been able to produce some evidence which supports his case that he is servicing some of this debt. In his 2^nd affidavit dated the 14 November 2019 he states as follows:

14. Out of my monthly income of US$9,900 (HK$76,469) I have the following recurring General (household) expenditure that I must pay each month: -

Mortgage payments	:	HK$41,845
Utilities (electricity, gas, rates, telephone, water and internet)	:	approximately HK$10,000
Management fees	:	HK$5,155
Food	:	approximately HK$10,000
Domestic helper	:	HK$4,500
		Total HK$71,500

15. I have omitted from the above General expenses a sum ofHK$10,000 in respect of household expenses which was included in my Form E as I acknowledge that I do not need to spend that amount each and every month. But from time to time items of furniture need renewing, and repairs need doing to the flat.

16. In my Form E, I stated that my personal expenses, including my monthly payment to Inland Revenue Department of HK$8,000, amounted to HK$26,000 in total.  This figure also included meals out of home (HK$2,000), transport (HK$2,000), clothing and shoes (HK$2,000), personal grooming (HK$1,000), entertainment/presents (HK$4,000), holidays (HK$2,000), medical/dental (HK$2,000), and HK$3,000 to dependent family members. In my present situation, I have had to cut back on many of these items, but I can only cut back so much.  Realistically, I estimate my personal expenditure, including my tax of HK$8,000, to be approximately HK$20,000 per month.

17. Further, in my Form E, I stated that my monthly expenses in respect of S and D amounted to $32,000. That figure includes approximately HK$4,000 per month for S’s school fees and, now that D is at university in Hong Kong, HK$22,000 per term, equivalent to HK$5,500 per month.  A total of HK$9,500 per month on education for S and D.  They each look to me to provide for school books and stationery, transport to and from school/university, any medical or dental expenses they incur, extracurricular activities entertainment/presents, clothing/shoes, lunches and pocket money. In addition, there are many other incidental expenses that they look to me to pay for, such as school trips, taxis, cosmetics, dry-cleaning, etc. Despite a desire a reduce my total expenditure on the girls, this is not a matter over which I have complete control.  Realistically, I very much doubt that I can get my monthly expenditure on the girls to a figure below HK$25,000.

18. In summary therefore, I have must pay General (household) expenses of HK$71,500, current personal expenses of approximately HK$20,000 per month and spend approximately HK$25,000 per month on the children.  That amounts to a total expenditure of HK$116,500 per month.  And this on a current income of only HK$76,469. A shortfall of HK$40,031 per month.

17.  Although it may be possible to bring some of these expenses down, I accept nonetheless that the husband’s finances are extremely stretched at present.

How much can the husband afford to pay?

18.  Notwithstanding that, it seems to me that the husband should be able to reorganize his financial affairs to a limited extent in order to pay the wife an amount that is more reflective of the standard of living in the Philippines.  To that end I shall order that the husband do pay the wife HK$4,500 per month on an interim interim basis. In doing so I am also cognizant of the fact that the husband has historically had the ability to raise loans and that if necessary he can draw on such loans in order in part to make some interim financial provision for the wife. See for example paragraph 3.92 of Jackson’s Matrimonial Finance 9^th edition where it states as follows:

“When a party applies for an order for maintenance pending suit or for periodical payments, it is not a complete answer to the claim for the potential payer to say: ‘I have no income and no assets’. In one case, a husband with a very small income (in three successive years it was £42, £69, £60) who asserted that he was ‘living on borrowed money and starving off a number of creditors while he [was] developing certain properties’, was nevertheless shown to have maintained by means of bank loans a consistent standard of living over a substantial period: the court in effect held that if he could borrow for himself he must likewise borrow for his wife. The principle was that he was able to touch resources from which payments could be made; he had the ability to obtain the necessary money, albeit bank loans, and it was assumed that his ventures were such as not only to justify the loans but also reasonably to contemplate their repayment in due course ….”

I agree with this approach.

19.  All in all I am satisfied that the husband does have the means to pay the husband HK$4,500 per month on an interim interim basis, even if this means him going into further debt in the short term.

Litigation funding

20.  However as will be seen below, I shall not make any order for litigation funding.

The law

21.  It is accepted, that Currey v Currey [2006] EWCA Civ 1338 is now routinely applied in Hong Kong and should therefore be relied upon in this instance.

In Currey v Currey [2006] EWCA Civ 1338,

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

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

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

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

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

There is also a requirement to undertake an overarching enquiry

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

(See K v C (FCMC 5508/2005, 7 August 2007 and HRT v RHT (FCMC 5488/2006, 21 June 2007 unreported)).

22.  It is also accepted that the breakdown of litigation costs sought must be reasonably detailed. In this instance only a very general analysis was provided, as set out in the wife’s third affidavit dated the 2 October 2019:

4.   As at the filing of my latest Form H on 4^th September 2019 my legal costs were estimated at HK$102,134.00.

5.   I am advised by my solicitor that if these proceedings proceed as threatened by the Respondent by legal cost will escalate very substantially and I can expect at least a three-day trial on the main suit, a potential three-day hearing on the pre-nuptial issue and at least a three-day trial on financial ancillary relief and a potential of at least a one-day hearing in respect of matters relating to Siena.

6.   With Counsel instructed to appear I can expect Counsel fees of at least HK$600,000.00 to HK$700,000.00 and solicitor’s charges of at least the same amount making a total of HK$1,200,000.00 to HK$1,400,000.00.

7.   In the circumstances I will require MPS for litigation pending funding from the Respondent of lump sum(s) to cover this or at least monthly payments of HK$67,000.00 to cover if the litigation takes IS months to complete.

8.   I am advised this is only an estimate and these estimated costs could increase substantially. I therefore reserve my right to revise this claim.

9.   I do not have the means to fund this but I believe that the Respondent can from resources, monies and matrimonial assets under his control.

23.  This breakdown is not accepted. The issue of the suit has now been compromised and once a consent summons on the youngest child has been endorsed the matter should be able to proceed to a Financial Dispute Resolution hearing. Although there is a potential preliminary issue with respect to the pre-nuptial agreement, a Crossley application has not been issued and it may be possible and more cost effective to proceed directly to the FDR hearing in any event.  

24.  In so far as the Currey protocol itself is concerned, it is clear that the wife does have some assets at her disposal in the Philippines, although it is accepted that it may not be possible or reasonable for those to be deployed for litigation costs. I also accept that she is unlikely to be able to offer security for borrowings at the level required or that she could obtain legal services under 3). But I do not accept that it would not be appropriate for the wife to apply for Legal Aid, or that she definitely would not be eligible. Thus it is also directed that the wife applies for Legal Aid, with a view to obtaining the outcome prior to the matter returning to court.

Costs

25.  Given the circumstances costs shall be reserved for the time being.

Further directions

26.  In so far as the future conduct of this case is concerned, as I have intimated, it seems to me that it should probably proceed directly to FDR as quickly as possible, notwithstanding any potential argument over the pre-nuptial agreement. I will expect to be addressed on this point at the next First Appointment hearing. Further consideration will also need to be given the MPS summons and whether or not the wife wishes to pursue this further. In addition, I shall direct that the wife produces the original executed pre-nuptial agreement.

27.  I shall not backdate the maintenance as it seems to me that to do so could place an intolerable financial burden on the husband’s shoulders at the same time as he is fully supporting the younger two daughters.  

Order

28.  Thus I shall make an order as follows:

1) The Respondent do pay interim maintenance pending suit to the Petitioner for herself in the sum of HK$4,500 per month, the first payment to be made on the 1 June 2020 and thereafter to be paid on the 1st day of each succeeding month until further order;

2) Costs of the summons be reserved in the first instance.

3) The Petitioner’s summons dated the 10 September 2019, the First Appointment hearing and the Children’s Appointment hearing shall be adjourned to the 8 September 2020 at 9:30 am   

4) Both parties do personally attend that hearing.