R, V v. A, A also known as AA

FCMC 7978 / 2017

[2019] HKFC 25

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 7978 OF 2017

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J U D G M E N T

(Maintenance pending suit/Interim maintenance)

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Introduction

1.  This is an application by a Petitioner wife for maintenance pending suit for herself pursuant to section 3 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO) and interim maintenance for two children of the family, two girls now aged nearly 13 and 6 years of age, pursuant to section 5 of the same ordinance.

The main issues

2.  In broad terms there is only one issue to be determined namely how much maintenance should the husband pay to the wife for herself and the children on an interim basis.

3.  The wife seeks an order in the sum of HK$217,000 per month plus a continuation of payments by the husband of the children’s school fees, their school bus fees, insurances and the monthly bill at the X Club (X). In addition, the husband is currently responsible for payment of any expenses attributable to joint investments including a property in Singapore and other properties in India. The wife does not seek any order with respect to litigation funding at this stage, but she wishes to reserve her position in that respect. It is the wife’s case that she will continue to fund her own litigation costs for the time being from her own resources and that she will also be responsible for her own personal expenses from her income/financial resources.

4.  It is of note that the parties have been unable to agree final arrangements in relation to the children and that a trial is scheduled in that respect in March. The parties currently have joint custody of the children. In addition, by virtue of a court order dated the 31 May 2018, the wife/mother has interim care and control of them, with interim defined access to the husband/father, who has the care of the girls on alternate weekends from Friday after school until 7:00 pm on Sunday. In addition, he has staying access on each Wednesday, from after school until the following Thursday morning and access on Monday after school until 6:45 pm on alternate weeks, when the children are not with him over the weekend. The father is seeking an order for shared care on a more or less equal basis. This is resisted by the mother.       

5.  The husband is currently paying the wife HK$50,000 per month (although he has historically also deducted the costs for one of the domestic helpers from this sum) plus he continues to pay for the girl’s school fees, their school bus fees, for insurances and for the monthly costs at the X.

6.  Prior to the hearing the husband put forward the following open proposal to the wife:

The Husband’s Proposal

6.  The Husband proposes that there shall be an advanced capital division by selling the jointly owned Singapore property and splitting the net sale proceeds.  It is expected that the net sale proceeds will come to more than HK$5 million each. It should be sufficient and provide the needed flexibility as it will be at each party’s discretion to use the proceeds for discharging legal and/or other regular expenses.

7.  The rationale of this proposal has been set out in Paragraph 54 of the Husband’s 4th Affirmation filed on 7 November 2018 and are repeated and elaborated below:

a.   The parties currently own about 10 properties linked investments, one each in Hong Kong, Singapore, Malaysia, and 7 in India.  While the total equity value of these properties is around HK$24 million, the properties in India account for only HK$4 million and the other properties account for HK$20 million.  The Husband would like to seek a consensus with the Wife to reduce the number of such assets and keep only the core assets.

b.   The decision to sell Singapore property is to reduce the overall exposure of the family’s assets to the risks within the property market.  The value of the Singapore property accounts for more than half of the value of all the properties added together.  This may pose significant risk to family’s wealth in the event of adverse future events such as an increase in interest rates (which have gone up significantly just in the last one year) or a market downturn.

c.   Further, the decision to purchase the Singapore property was made by the Husband for investment purposes.  The property was purchased for around HK$17.4 million (SG$3 million) in April 2007 and is currently valued at close to HK$29 million (SG$5 million) according to the Wife’s estimate in her Form E.  The unrealised gains on this property are close to HK$11.6 million.  The outstanding mortgage on the property amounts to approximately HK$18 million.  If sold, each party will get about HK$5 million.

d.   The Singapore property is currently rented out at SGD7,200 per month (i.e. HK$41,760 per month).  The interest cost on this mortgage is currently higher than the rent and the total mortgage repayments amount to HK$90,000 per month. Besides, it has huge maintenance costs, i.e. management fees, taxes, brokerage, repairs and maintenance costs amounting to SG$4,000 per month / HK$23,000 per month.  The maintenance of this property is unsustainable.

e.  This property does not offer any balancing benefits such as Singapore resident rights. Therefore, it cannot be a residential alternative unless either of us [the parties] takes up employment in Singapore and the family relocates to Singapore, which is not the position of either party who are committed to staying in Hong Kong.

f.  The Singapore property market is currently quite liquid, and our [the parties] investment gains can be realized fairly quickly.  If the Wife insists upon maintaining this property as a core asset for further investment gains, she should then take over the day to day maintenance obligations, providing liquidity and take up the investment risks.

8.  In the event that the Wife refuses to allow the sale of Singapore property, the Husband does not have any investment assets available for immediate liquidity except for the loan/deposit made to SR.  The Husband cannot terminate the entire loan of HK$16 million at a short notice but would be able to do that in instalment of HK$2 million spread over 6 to 12 months.  This option only allows the Husband to meet his own obligations and expenses and the Wife would need to bear the risks associated with the decision to retain the Singapore property (including the fluctuation of property price) as well as take over all responsibilities related to maintenance and mortgage related payments.

9.  The Husband will continue to pay HK$50,000 per month into the parties’ Citibank joint account until the Singapore property is sold.

This proposal was not accepted by the wife. It is trite but worth repeating, that the court has no ability to make an order for interim lump sums or interim orders for sale. 

Background 

7.  The parties married on the XX March 1999 and separated in or about December 2014, but continued to reside under the same roof. The wife is 43 and the husband is 45 years of age. They are both of Indian descent and they are both very well educated. The husband was previously employed as an investment banker and the wife has held a number of positions and is currently employed in a part time capacity in the executive search space. The wife issued a divorce petition on the 22 June 2017. The decree nisi has yet to be pronounced.  

8.  It is the husband’s case that, although originally in paid employment, that he made a conscious decision to leave banking in order to be able to spend more time with the children. It is his position that he was a full time care taking parent. This is strenuously denied by the wife. She says that although she has worked from time to time in either a full time or part time capacity, that she was essentially a “trailing spouse”, that it was the husband who was always financially responsible for the family and that she was primarily responsible for the children. She says that there’s was a “traditional” marriage in all respects.

9.  In any event it seems reasonably clear that the husband is no longer receiving any remuneration from his previous employment, deferred payments having allegedly ceased in March 2017, and that all income is now derived from investments. It is the husband’s case that although he was able to maintain the family whilst the parties were living together, and the wife was working, that it is not possible for him to maintain two households at the level requested by the wife.

10.  This in turn is not accepted by the wife, who accuses the husband of material non-disclosure. She also points out that the husband told the Social Welfare Officer that he had an income of between HK$3 – 5 million per annum. She says that he has the financial resources available to pay what she seeks.

The law

Maintenance pending suit and interim maintenance

11.  The law is well known and not in dispute. Section 3 Matrimonial Proceedings and Property Ordinance Cap 192 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. 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 a set off. In other words, if there is any overpayment or underpayment that can normally be rectified at a final ancillary relief hearing. Applications for interim maintenance under section 5 of the same ordinance are approached in the same way. As Rayden points out

…what really matters is the immediate and reasonable requirements of the wife balanced against the ability of the husband to pay for them, assessed using a broad-brush approach. (See paragraph 16.17 of Rayden, 18^th edition).

12.  Further

In practice, as oral evidence is rarely given, it will be unusual for the court on an application for maintenance pending suit to be in a position to make findings of fact on issues in dispute sufficient, for example, to deal with conduct or allegations of non disclosure.  However, if it is demonstrated that the paying party has not performed his duty to make full and frank disclosure of his financial resources, then the court can take a broad and robust view of his means, and it does not have to accept and proceed on the basis of the assertions of the paying party as to his means and an inability to pay.  The court can look at the reality of the situation …… Any under provision or over provision in the order for maintenance pending suit can always be corrected when the account comes to be taken at the substantive hearing when there are every opportunity to do fairness by set off ……” (See paragraphs 16.18 of Rayden, 18^th edition).

13.  Likewise the court may look to the assertions made by the payee and take a similar approach when looking at her means and alleged reasonable requirements.  The court should try to look to the reality of the situation, in so far as it can, in relation to bare assertions made by either the husband or the wife.

14.  Although I was not specifically referred to the following authority by either side it seems to me that the following section from Jackson’s Matrimonial Finance 9^th edition (paragraph 3.92) may also be of some assistance:

“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 staving 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 ….”

In this instance it is clear that the husband has borrowed from third parties. Further the parties have enjoyed a good standard of living that increased in line with the father’s income during the course of the marriage.   

15.  Reference has also been made by each side to the Court of Appeal decision in HJFG v KCY [2012] 1 HKLRD 95 where it was held inter alia that:

“(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. 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.”

In this case it is clear that the parties enjoyed a high standard of living, consistent with an ex patriate lifestyle and their incomes and other financial resources, prior to the breakdown of the marriage. 

What are the wife’s reasonable needs?

16.  The wife’s most updated schedule, which provides her most recent estimates of expenditure and also comments on the husband’s stated expenses, can be found in exhibit RV 3 – 3 attached to her 3^rd affirmation dated the 27 August 2018. With respect to her general expenses, she states as follows:

General expenses

Item	Amount in my Form E (HK$)	Updated amount (HK$)	Remark	The Respondent’s expenses as per his Form E (HK$)
Rent	$70,000.00	$70,000.00	Based on current actual expenses	$110,000.00
Mortgage instalments*	-	-		$103,703.00
Utilities (electricity, gas, rates, telephone & water)	$6,577.00	$6,577.00	Estimated based on actual expenses of the former matrimonial home	$10,000.00
Management fees	-	-		$9,036.00
Food	$19,000.00	$19,000.00	Estimated based on actual expenses of the former matrimonial home	$25,000.00
Household expenses	$17,103.00	$17,103.00	See further breakdown	$5,000.00
Car expenses	$4,973.00	$6,099.00	Based on current actual expenses for 1 car	$10,000.00
Insurance premia	$467.00	-		$1,000.00
Domestic helper(s)	$12,542.00	$8,795.00	Cut back from 2 full-time domestic helpers to 1 full-time domestic helper and 1 part-time helper	$7,000.00
Other (X Club)	$6,660.00	-	Assuming settled by the Respondent directly	$4,000.00
Other (Y Club)	Settled by the Respondent directly	-		-
Other (Netflix and online subscriptions)	$293.00	$293.00	Based on current actual expenses	-
Newspapers and magazine subscriptions	$257.00	$257.00	Based on current actual expenses	-
Total monthly household expenses	$137,872.00	$128,124.00		$284,739.00
*  There are some double counting issues in the Respondent’s Form E where mortgages seem to be deducted from rental income but also taken under expenses which will have to be addressed in later proceedings.

17.  In addition, she says that she has personal expenses of just over HK$56,000 per month, which she proposes to settle herself. These are as follows:

Personal expenses

Item	Amount in my Form E (HK$)	Updated amount (HK$)	Remark	The Respondent’s expenses as per his Form E (HK$)
Meals out of home	$6,650.00	$6,650.00	Meals during work days and weekends	$10,000.00
Transport	$2,280.00	$2,280.00	Include transport to office	$2,500.00
Clothing / Shoes	$5,800.00	$5,800.00	Include bags and accessories	$2,500.00
Personal grooming (including haircut and cosmetics)	$4,633.00	$4,633.00	Include HK$15,00 per month for yoga/gym	$4,000.00
Entertainment / presents	$9,364.00	$9,364.00	Include entertainment, jewelleries and presents	$15,000.00
Holiday	$8,251.00	$8,251.00	Flight costs for 1 long haul, 2 short hauls and 2 India trips; based on economy fares though usually travelled business to India with miles; include 1/3 of accommodation and food (2/3 under children expenses)	$15,000.00
Medical / Dental	$2,998.00	$2,998.00	Includes optical, dental, counselling	$2,000.00
Tax (@17% salary tax)	$18,700.00	$9,350.00	Taxes halved from Form E due to half income with effect from April 2018	$15,000.00
Insurance premia	-	-		$1,000.00
Interim maintenance	-	-
Contribution to parents	$5,000.00	$5,000.00	For mother	$15,000.00
Dependent family members	$1,000.00	$1,000.00	3 return fares to India per annum (2 for mother and 1 for brother); based on economy fares	-
Others (specify)	-	-
Digital Devices	$1,250.00	$1,250.00	Mobile, laptop, iPad, kindle, accessories
Guitar Lessons				$3,200.00
Vocal music – Classical singing				$3,200.00
Wing Chun				$2,000.00
Gardening and Other Hobbies				$1,000.00
Clarity contribution to Anti-corruption movements like AAP in India, Julian Assange (Avg. Approx. Monthly Eq.)				$5,000.00
Total monthly personal expenses	$65,926.00	$56,576.00		$96,400.00

18.  Finally she says that the children’s expenses amount to just under a further HK$53,000 per month as set out below:

Children expenses

Item	Amount in my Form E (HK$)	Updated amount (HK$)	Remark	The Respondent’s expenses as per his Form E (HK$)
School fees	$19,040.00	-	Assuming settled by the Respondent directly	$25,000.00
School camp	$1,042.00	$1,042.00	Based on last year actual expenses	-
Extra tuition fees	-	-		Paid by me
School books and stationery	$1,450.00	$1,450.00	Estimated	Paid by me
Transport to school (including school bus)	$3,792.00	-	Assuming settld by the Respondent directly	$3,000.00
Medical / Dental	$1,175.00	$1,175.00	Optical and dental costs only (not covered by insurance)	Paid by me
Extra Curricular Activities	$11,873.00	$11,073.00	Based on last year actual expenses	Paid by me
Entertainment / presents	$13,520.00	$13,520.00	Include meals, activities, birthday arties	Paid by me
Holidays	$14,075.00	$14,075.00	Include flights and share of accommodation costs for 1 long haul, 2 short haul and 2 trips to India	$20,000.00
Clothing / Shoes	$5,40.00	$54,400.00	Based on last year actual expenses	$5,000.00
Insurance premia	$2,600.00	-	Assuming settled by the Respondent directly	$5,000.00
Lunches and pocket money	$600.00	$1,500.00	More school lunches/canteen/snacks for I since she started secondary in September 2017	$2,000.00
Other Transport	$3,060.00	$3,060.00	Estimated including to extra-curricular activities and school pick-ups	$2,000.00
Child-minding fees	-	-		-
Uniform	$492.00	$492.00	Based on last year actual expenses	Paid by me
Others (specify)	-	-		-
Total monthly expenses for Children	$78,119.00	$52,787.00		$62,000.00

Discussion

19.  I should say at the outset that although in some cases it may be appropriate to split the costs for children on a 50:50 basis, that is generally where the parties are earning a similar amount, or they have similar financial resources otherwise. In this instance the wife seriously challenges the position taken by the husband. She simply does not accept what he says about his own financial situation, which in essence she says “beggar’s belief”. In contrast her own financial position is quite straight forward. She is currently earning HK$57,000 per month and she has some liquid assets at her disposal of approximately HK$4.4 million. In contrast the husband is said to currently have no earned income and his investments are also said to be longer term in nature. In such circumstances it is hard to see how the husband would have been able to sustain the parties and the children of the family, even if the family had remained intact.

20.  I should add that given that both parties have a significant earning capacity, and in the event that the husband’s case is to be believed, that there will then likely be no alternative longer term but for both parties to do whatever is necessary to maximize their own earning capacity.

21.  In the shorter term I am approaching this case on the premise that the wife shall be responsible not only for her own direct expenses, but also for a share of the general expenses and for some of the children’s expenses. In so far as the husband is concerned, I will expect him to pay for a share of the wife’s general expenses, the children’s share of the general expenses and for the children’s direct expenses save for the wife’s estimate for entertainment, presents and holiday expenses for when the children are in her care.   

General expenses

22.  In so far as the wife’s general expenses are concerned, it is of note that they are also generally less than the husband’s schedule of general expenses (which appears to be a pre separation schedule in any event). However, it seems to me that both sides should be able to reduce some of these expenses, now that there are two households to run. In particular, both parties’ estimates for food seem very high. On a broad brush basis, I will allow each household HK$10,000 per month in that respect. I will also reduce the wife’s household expenses to HK$5,000 per month. I do not accept the suggestion that many of these expenses are recurrent expenses. Both parties shall also employ one domestic helper and I will allow HK$6,000 per month in that regard. The wife’s utility expenses are also likely to reduce now that she is living in a smaller flat. I will allow a further HK$5,000 per month for those expenses. In total then I accept that the wife has general expenses in the region of HK$103,000 per month as follows:

General expenses

Item	Amount allowed
Rent	$70,000.00
Mortgage instalments*	-
Utilities (electricity, gas, rates, telephone & water)	$5,000.00
Management fees	-
Food	$10,000.00
Household expenses	$5,000.00
Car expenses	$6,000.00
Insurance premia	$467.00
Domestic helper(s)	$6,000.00
Other (X Club)	Settled by the Respondent
Other (Y Club)	Settled by the Respondent directly
Other (Netflix and online subscriptions)	$293.00
Newspapers and magazine subscriptions	$257.00
Total monthly household expenses	$103,017.00

23.  Half of this sum, rounded down, will be attributable to the children at HK$51,500 per month. The husband shall be responsible for this sum. In addition, the husband shall be responsible for 50% of the wife’s general expenses in the sum of HK$25,750 per month. The wife shall be responsible for the balance.  

24.  In so far as the wife’s personal expenses are concerned, she shall be wholly responsible for these. Some seem very high in any event and are clearly capable of reduction. Similarly, the husband should be able to reduce his own personal expenses by a significant amount.

The children’s expenses

25.  The husband has agreed to pay for the children’s school fees, school bus fees, insurances and for the X monthly chit. I will hold him to that agreement, which shall be expressed as undertakings in the preamble of the order. Some of the remaining expenses seem very much on the high side. For example, I have reduced the estimate for ECA’s to HK$10,000 per month i.e. HK$5,000 per month per child. It is for the wife to operate within this budget. In addition, it seems to me that the parties shall each be responsible for their own costs for entertainment and presents for the children and for the costs of holidays (which on the wife’s estimate seems very high in any event). I will therefore allow the following additional direct expenses for the children as follows:

Item	Amount in my Form E (HK$)
School fees *	($19,040.00)
School camp	$1,000.00
Extra tuition fees	-
School books and stationery	$1,450.00
Transport to school (including school bus) *	($3,792.00)
Medical / Dental	$1,175.00
Extra Curricular Activities (ECA’s)	$10,000.00
Entertainment / presents *	($13,520.00)
Holidays *	($14,075.00)
Clothing / Shoes	$5,000.00
Insurance premia *	($2,600.00)
Lunches and pocket money	$600.00
Other Transport	$3,060.00
Child-minding fees	-
Uniform	$492.00
Others (specify)	-
Total monthly expenses for Children	$22,777.00

In total this amounts to HK$22,777, which shall be rounded up to HK$23,000 per month.  

Standard living

26.  In allowing these sums I have recognised that when a marriage breaks down and the parties begin to live in two separate households it is not possible, generally speaking, to maintain the same standard of living as before. There has to be, by necessity, some form of adjustment. This case is no exception.       

Conclusion

27.  In conclusion then I will make an order that in total the husband do pay the wife HK$74,500 per month (i.e. HK$51,500 + HK$23,000 = HK$74,500) as interim maintenance for the two children of the family plus HK$25,750 per month as maintenance pending suit for the wife. He will also undertake to continue to make those payments set out in paragraph 25 above. It seems to me that the husband should be able to pay this sum by cutting down on his own expenses, borrowing as he has before and by restructuring his investments and that the wife should be able to support herself in the immediate to short term by relying on the maintenance together with her own income and other financial resources.

Costs

28.  Given that the wife really had no alternative but to seek the assistance of the court and notwithstanding the fact that the court has not made an order in the terms that she sought, I will nevertheless make an order nisi to be made absolute in 14 days’ time that the husband do pay the wife’s costs of this application on a party and party basis to be taxed if not agreed.

Order

29.  Consequently I shall make an order as follows:

AND UPON the Respondent undertaking to continue to pay for the children’s school fees, school bus fees, insurances for the children and the X monthly bill directly.

IT IS ORDERED THAT: 

1)  The Respondent shall pay maintenance pending suit to the Petitioner for herself in the sum of HK$25,750 per month, the first payment to be made on the 1 February 2019 and thereafter to be paid on the 1st day of each succeeding month until further order.

2)  The Respondent shall pay interim maintenance to the Petitioner for the two children of the family in the sum of HK$37,250 per child per month the first payment to be made on the 1 February 2019 and thereafter to be paid on the 1^st day of each succeeding month until further order.

3)  The First Appointment hearing shall be adjourned until after the conclusion of the children’s trial.

4)  Both parties do personally attend that hearing.

5)  There shall be an order nisi to be made absolute in 14 days’ time that the Respondent shall pay the Petitioner’s costs of and occasioned by this application on a party and party basis to be taxed if not agreed.