PYK v. CCLA

FCMC 11163/2019

[2023] HKFC 11

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 11163 OF 2019

------------------------

------------------------

_______________________

DECISION
( Interim Maintenance )

_______________________

Introduction

1.  This is an application by the Respondent Wife (“W”) for interim maintenance for the 2 daughters against the Petitioner Husband (“H”).

2.  H and W were married in 1995 with 2 daughters “C” and “N” who were born in 1999 and 2000 respectively.

3.  H and W separated since 2015 and H petitioned for divorce on the ground of two-year separation on 17 September 2019.

4.  As both C and N were over 18 years old at the time of the Petition, no question of custody, care and control arose.

5.  At the time of the Petition, C and N were students studying in the UK and would stay with W when they were in Hong Kong. C began her studies in the UK in 2015 and N was a sixth form student at a secondary school in the UK in 2017.

6.  In July 2021, C completed her bachelor degree and N completed her secondary school education.

7.  It is common ground that H had been solely bearing all education and living expenses of C and N in the UK since H and W’s separation in 2015.

8.  By a summons filed on 27 August 2021, W applies for IM for C and N. After clarification, W now seeks the following:

(1)  Interim monthly maintenance in the sum of £7,686 for the benefit of C for the period from September 2022 until August 2023;

(2)  Interim monthly maintenance in the sum of £5,192 for the benefit of N for the period from August 2022 until further order; and

(3)  Payment of a lump sum of £17,650 representing the living expenses incurred by C and N in the UK during the period from May 2021 to September 2021.

W’s Case

9.  It is W’s case that H had been providing for C and N even after his separation with W in June 2015 until April 2021 for almost 6 years.

10.  However, since April 2021, H had stopped making any payments for C and N’s living expenses in the UK.

11.  W was born in 1971 and has worked as a school teacher making HK$61,415 per month but has significant outgoings up to HK$95,707.4 per month including HK$24,000 as rental expenses, HK$13,000 as medical expenses for her many disabilities and illness. She had further incurred over HK$1.5 million debt from her friend to meet her outgoings. She further has to take care of her mother’s medical expenses and legal fees in the sum of HK$530,000.

H’s Case

12.  H was born in 1969 and used to work as a production manager in W’s family watch business and started his own watch business in 2006.

13.  His business slumped in late 2016 and its operation ceased and was dissolved in 2017, H since then became unemployed.

14.  H had paid over HK$4 million and over HK$0.3 million for C and N’s flight tickets and living expenses when they returned to Hong Kong during holidays.

15.  H had paid over HK$1.5 million from 2017 to 2019 for W’s brother’s medical expenses for his pancreatic cancer who passed way in 2019.

16.  His total expenses on C and N and W’s brother amounted to over HK$7.3 million.

17.  H met these expenses from sale proceeds of his factory and assets as well as loans.

18.  H sold his factory to another company “RG” for HK$3 million in early 2017. The outstanding mortgage was HK$778,273.72. The net sale price of the factory was HK$2,221,726.28. RG was run and controlled by a business partner of W’s brother, Mr. Leung.

19.  After the cessation of his business, H entrusted intermediaries in the Mainland to seek buyers to purchase all the remaining inventories, used machines and equipment of H’s business. H began to receive sale proceeds from January 2017 until they were all sold in March 2020.

20.  The money was not enough for H to cope with all the expenses, H had to borrow since 2015. H took out multiple credit card cash instalment loans from which he could repay by instalments on different due dates.

21.  When the instalments of shares overdraft fell due, H repaid the loans by selling securities or by another credit card cash instalment loan.

22.  H was heavily indebted for around HK$1.8 million.

23.  H noted that C had completed her Bachelor degree and N had completed her secondary school education in 2021.

24.  H complained that W had failed to give particulars of C and N’s educational expenses to incur. It was also the first time H learnt of C’s intention to study a master degree in translational neuroscience in the UK and that N had applied to university in the UK.

25.  H contends that W has equal legal obligation to maintain C and N as a parent which could be supported by her stable teaching job for the past 14 years with a monthly salary of HK$61,415.

Legal Principles

26.  Section 5 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) applies to interim maintenance for children of the family, the factors set out in section 7(2) are to be considered.

27.  It is trite law that such applications are approached on a broad-brush basis. A detailed examination of the parties’ means may be examined at a full ancillary relief hearing when there is then the opportunity to achieve fairness by means of set off. If there is any overpayment or underpayment, it can be rectified at a final ancillary relief hearing. (LAML v TCCY, (unrep.; CACV 75/2004, 13 September 2004))

28.  The following principles were set out in the Court of Appeal decision in HJFG v KCY [2012] 1 HKLRD 95 with respect to maintenance pending suit/interim maintenance applications:

a.  The sole criteria to be applied in determining the application is “reasonable” which is synonymous with “fairness”.

b.  A very important factor in determining fairness is the marital standard of living.

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 situation, the Court should err in favour of the payee.

H’s Inability to Pay

29.  There is no dispute that H had been solely responsible for C and N’s education and living expenses in the UK since 2015 before the H’s Petition for divorce.

30.  H was further under an undertaking to pay C and N’s reasonable education and living expenses in the hearing before HHJ Au-Yeung on 23 November 2020 up to the next hearing. H had reiterated that he had fully paid for all education and accommodation expenses of C and N for the academic year 2020 to July 2021.

31.  It is the case of H that there was a material change of H’s financial capability, he was unable to pay for W’s monthly budget of C and N which was considered not immediate or reasonable needs for the benefit of C and N.

32.  H had been unemployed since 2017, his monthly personal expenses according to his Form E dated 18 November 2020 were HK$21,000 and monthly child expenses were HK$123,500.

33.  H alleged that there was a material change in his financial capability. After the sale of H’s factory and all inventories and items of his business, he no longer received sale proceeds at all after March 2020.

34.  However, H had been paying for C and N’s education expenses even after March 2020. If the cessation of sale proceeds could be considered a material change of his financial capability, it took place as early as March 2020 but H was still able to keep up with the education and accommodation expenses of C and N since March 2020 until July 2021.

35.  It is trite that an ability to raise loan is considered financial resources. (Jackson’s Matrimonial Finance (9^th edn.) at para. 3.92).

36.  Since March 2020, all H could rely was allegedly just loans to afford C and N’s expenses. If H managed to keep paying C and N’s expenses by loans, I do not see why H could not continue doing so.

37.  Further, I am not satisfied that H had no earning capacity.

38.  H alleged to have been unemployed since the cessation of his business in 2017. However, there is no evidence as to why H had remained unemployed, it is not clear as to what attempts H had made in trying to seek employment but still to no avail.

39.  Even if H had difficulties looking for jobs based on his expertise or experience in watch industry, he could still try to look for work more of a general or clerical nature. From H’s lack of evidence in this respect, H apparently did not even try to look for jobs which in my view was some unusual behaviour.

Material Non-Disclosure

40.  It is W’s complaint that H is guilty of material non-disclosure.

41.  W questioned the sale of H’s factory to RG as a sham transaction based on matters including odd payment arrangements. However, with the limited materials before me, it is difficult to embark on a mini trial here. This matter ought to be left until trial.

42.  W further alleged H to have failed to disclose his PRC bank account in his Form E dated 18 November 2020 and he admitted so only in answering W’s questionnaire.

43.  More importantly, H had failed to disclose a PRC property he had interest in as disclosed by W’s investigation.

44.  The PRC property is a 5-storey residential building which was registered in the names of H, H’s mother and W.

45.  W only recalled that in or about 2014, H asked her to be one of the joint owners of a residential building on a piece of land owned by H’s family and to sign certain documents without giving her copies thereof.

46.  H did not file any evidence in response to this allegation of non-disclosure. H offered an explanation through his counsel, Mr Wong’s submissions complaining that such allegation was first raised only in W’s reply affirmation.

47.  On this I agree with Mr. Lam for W that H could have sought leave to adduce evidence to offer an explanation if he considered himself deprived of any opportunity to answer the accusation.

48.  I do not accept that evidence should be adduced through counsel’s submissions.

49.  Although W was also named as one of the registered owners, as the residential building was purportedly built on H’s family land without details given to W, it is not surprising that she would have forgotten about it until her recent investigation.

50.  I find H to be not giving full and frank disclosure in disclosing all his assets.

51.  As said in HJFG v KCY [2012] 1 HKLRD 95 above, this Court is entitled to make robust assumption against the party who has failed to make full and frank disclosure.

52.  I hereby draw an adverse inference against H in respect of his ability to pay and find that H has the financial ability to pay for C and N’s education and living expenses.

W’s Obligation

53.  Mr Wong argued that W was trying to continue to evade her equal legal obligation to maintain C and N as their parent.

54.  I do not agree that W must be financially equally liable for C and N’s expenses.

55.  How much each parent should be responsible their child’s expenses must depend on all the circumstances of each case.

56.  There is no dispute that W is earning HK$61,415 each month.

57.  However, since their separation in 2015, H had all along been responsible for C and N’s education and living expenses in the UK while W was primarily responsible for providing for C and N when they were in Hong Kong and as part of her contribution to the maintenance of C and N, W’s rented premises were also used as the home for C and N when were in Hong Kong.

58.  Such arrangements apparently had been agreed and practised by H and W for years even before H’s Petition. In my view, W had made her contribution towards C and N’s expenses pursuant to an agreement and understanding between parties, the arrangement ought to carry on unless there are good reasons to alter.

59.  Having drawn an adverse inference against H in respect of his ability to pay, I see no good reason to upset the ongoing arrangement between H and W in respect of maintenance of C and N in the meantime.

60.  Adjustment can always be made at the trial of ancillary relief.

C and N’s Reasonable Needs for Education and Living Expenses

61.  C’s budget is for her studying a master degree in translational neuroscience.

62.  As stated by HHJ Melloy in KS and YP, FCMC 2649/2016 at para 11:

“It is generally accepted that maintenance for children should be paid until they reach the age of 18 years or cease full time education i.e. when they have finished their first degree or its equivalent.”

63.  There is no evidence that H and W had agreed to provide maintenance for C to continue after she had finished her first degree.

64.  In these circumstances, I am not satisfied that W has made out her case as to why H should keep providing for C when she is over 18 years old and has finished her first degree, I therefore do not allow this part of the claim.

65.  There is no such problem in the case of N who just finished her secondary school education.

66.  N should start her schooling in September 2022. W is seeking interim maintenance £5,192 for the benefit of N for the period from August 2022 until further order. The sum of £5,192 should cover £3,120 as N’s living expenses, £1,192 as school fee and £880 as student visa plus plane tickets.

67.  No evidence has been filed by H to question the budgets for N’s education and living expenses in the UK.

68.  Mr Wong argued that W only provided the budgets for N’s education and living in the UK in her reply affirmation.

69.  I agree with Mr Lam, H could have applied for filing of further evidence if he thought he had been deprived of an opportunity to challenge the figures proposed by W.

70.  Under these circumstances, I proceed to consider the reasonableness of the education and living expenses of N in the absence of adverse evidence from H. H had been paying HK$123,500 each month as the children’s expenses in the past. On a broad brush approach, I accept the budget of N to be reflecting her reasonable needs.

Conclusion

71.  In light of the foregoing, I would allow £5,192 as the interim maintenance for N for the period from August 2022 until further order.

72.  I, however, do not allow the interim maintenance for C.

73.  W asks that H do pay her C and N’s expenses between May 2021 and September 2021 in the monthly sum of £1,960 for C and £1,570 for N for 5 months.

74.  H claimed to have fully paid C and N’s education and accommodation expenses until July 2021 and it has not been disputed by W, therefore only expenses incurred by C and N in August and September 2021 should be relevant here.

75.  As C’s had finished her first degree by July 2021 after she had reached the age of 18, no payment would be allowed for her expenses.

76.  As for N, I am satisfied that N’s expenses in the UK in August and September 2021 should have been paid by H.

77.  H also complained about the lack of particulars and proof supplied by W, I consider the sum acceptable on a broad brush approach and would therefore allow £1,570 for N for 2 months, ie. £3,140.

78.  As for costs, neither party is considered entirely successful and no order should be made.

79.  I hereby make the following orders:

(a)  The Petitioner shall pay the Respondent monthly interim maintenance of the family child, namely N in the sum of £5,192 from 1 August 2022 and such sum is to be paid on the first day of each calendar month thereafter until further order;

(b)  The Petitioner do pay the Respondent the lump sum of £3,140 as living expenses for N in August and September 2021 within 14 days from the day of this Decision;

(c)  There shall be an order nisi to be made absolute in 14 days that there be no order as to costs of the Respondent’s Summons filed on 27 August 2021.