WW v. LLN formerly known as LSM

CAMP 237/2019

[2019] HKCA 1278

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 237 OF 2019

(ON AN INTENDED APPEAL FROM FCMC 4996/2018)

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REASONS FOR DECISION

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The Court:

Introduction

1.  Although the parties are divorced, we shall call them husband and wife respectively for ease of reference.  This is the husband’s renewed application for leave to appeal against the judgment of HH Judge C K Chan (“the Judge”) given on 23 July 2019.  In the judgment ([2019] HKFC 188; (“the MPS Judgment”), the Judge ordered the husband to pay the wife maintenance pending suit and to make litigation funding in her favour.

2.  After the Judge refused leave for the husband to appeal on 12 September 2019 (see [2019] HKFC 236; “the Leave Judgment”), the husband took out the present summons on 26 September 2019 renewing the leave application before this Court.  In the summons, he also applied for a stay of execution pending appeal.

3.  In view of the limited scope of the issues, and the need for proportionality, the Court originally intended to hold a rolled-up hearing for leave to appeal and the appeal itself and gave directions for the same.  However, on 1 November 2019, the wife saw fit to file a 4^th affirmation without leave of the Court.  In the 4^th affirmation, in addition to the giving of further evidence on the position of the UK Property, she advanced a new case that the Form H of 13 June 2019 was not accurate.

4.  She did not explain why the evidence in the 4^th affirmation was not filed either before the Judge or at the same time with her statement in opposition to the leave application of 9 October 2019.  Under paragraph 13 of PD 4.1, a party opposing an application for leave should file and serve his evidence in opposition within 14 days of service of the application.  Though there was no reference to evidence under Order 59 Rule 2A(4), the spirit of the rules is that all the relevant materials on the leave application should be filed within the time-frame set out in Rule 2A before the papers are considered by a Justice of Appeal.  Hence, the wife should have sought leave before she could file the affirmation out of time.

5.  When this Court gave the directions for rolled-up hearing, we did so on the basis that all the relevant evidence had already been lodged and we did not grant any leave for further evidence to be filed.  Those acting for the wife failed to have proper regard to what the Court had said in Li Cheong v Lee Kwai Tai [2018] HKCA 491 at [1] to [6] concerning the duty of respondent to a leave application. 

6.  The late filing of the affirmation caused those acting for the husband to object by letter on 4 November 2019.  The husband further indicated that he would wish to file further evidence in reply should the Court grant leave to the wife to use the late affirmation.

7.  In light of the tight time-frame, it would not be possible to hear the matter on a rolled-up basis.  The Court therefore gave directions on 4 November 2019 that the hearing on 8 November 2019 would only be concerned with the leave application and the admissibility of the 4^th affirmation.

Background

8.  The parties were married in 1993.  They have two sons, who are now aged 23 and 25 respectively. 

9.  In her summons for maintenance pending suit, the wife asked for monthly payments of $120,000, as well as litigation funding of $50,000 per month and back payment of $1,536,000 between January 2018 and February 2019.  In her affirmation in support filed on 30 January 2019, the wife claimed that the husband used to pay her monthly maintenance of $120,000. It was also deposed that her monthly expenses amounted to more than $200,000.

10.  The husband opposed the application.  He pointed out that the parties had agreed to separate their finance and, hence, he should not be responsible for the wife’s expenses.  He also challenged a number of items of the wife’s monthly expenses as being exaggerated.

11.  In the MPS Judgment, after considering in detail the items of expenses as proffered by the wife in her affirmation, the Judge considered that a sum of $60,000 would be reasonable to cater for her monthly needs.  The Judge also found that the wife’s estimated costs for the ancillary relief proceedings were reasonable, and ordered that the husband should make a monthly payment of $50,000 to her solicitors directly.  Finally, after giving thought to the issue of backdating, the Judge was of the view that the order should begin from the date of the application, as evidently there were still funds in the wife’s bank account before that time. 

Intended Grounds of Appeal

12.  In the draft Notice of Appeal attached to the present summons, the husband sought to rely on the following grounds in the intended appeal:

(1)  The Judge erred in making an order for MPS payment of $60,000 per month to the wife without any proper evidential basis and only on her bare assertions;

(2)  The Judge was wrong in failing to set-off the payments already made by the husband, namely the domestic helper’s monthly salary;

(3)  The Judge failed to properly take into consideration the husband’s case that the parties had already agreed on the separation of their finance in around 2005;

(4)  The Judge erred in allowing litigation funding of $50,000 per month, without any scope or limit (temporal or in relation to the stage of proceedings); and

(5)  In light of the above grounds, the Judge erred in allowing the backdating of the monthly payments to cover both maintenance pending suit and litigation funding from 1 February 2019 to 1 July 2019.

Legal Principles

13.  Under Section 63A(2) of the District Court Ordinance (Cap 336), no leave to appeal shall be granted unless the Court is satisfied that the intended appeal has reasonable prospect of success or that there is some other reason in the interests of justice that the appeal should be heard.

14.  Reasonable prospect involves the notion that the prospect must be more than fanciful without having to be probable: see SMSE v KL [2009] 4 HKLRD 125 at §17.

15.  As rightly pointed out by the Judge at §§12-15 of the MPS Judgment, section 3 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”) empowers the Court to grant maintenance pending suit for the reasonable maintenance of a spouse pending divorce.  The overriding considerations are fairness and reasonableness.  A broad brush approach is to be adopted, and it is not appropriate to conduct any detailed investigation of the financial affairs of the parties: see HJFG v KCY [2012] 1 HKLRD 95, §37-38. 

16.  The granting of maintenance pending suit is a discretionary remedy.  On appeal, the Court of Appeal will not exercise the discretion afresh.  Instead, it will only interfere with the decision when the discretion was wrongly exercised, such as being contrary to the principle or the primary judge had wrongly taken into account irrelevant matters or ignored relevant matters: see MWY v HWM HCMP 120/2017, 16 May 2017, at §3.2.

Ground 1

17.  It is wrong to criticize the Judge for making the order for maintenance pending suit without proper evidential basis.  The assertions made by the wife in Form E and in her supporting affirmation were proper evidence, which the Judge was perfectly entitled to take into account: see §9 of the Leave Judgment. It is a matter for the Judge to decide how much weight is to be attached to such evidence; and the Court of Appeal will not interfere with such a decision unless it is plainly wrong: see Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336; China Gold Finance Ltd v CIL Holdings Ltd CACV 11/2015, 27 November 2015; Hoptai Sharkfins Co Ltd v Productos Pesqueros Gallegos SL CACV 240/2014, 7 December 2015.  Hence, without identifying any palpable errors in the MPS Judgment, it is unmeritorious to challenge it on the ground that that it was only based on bare assertions.

18.  Ms Chan, counsel for the husband, criticized the Judge’s treatment on particular items of the wife’s expenses, such as food, medical expenses, recuperation, and car park rental.  In our view, this criticism is misconceived.  Having regard to the broad brush approach, nothing in Ms Chan’s submissions can persuade us that the sum of $60,000 was outside the ambit of fairness and reasonableness.

Ground 2

19.  In response to the alleged failure to set-off the domestic helper’s salary, the Judge said the following in the Leave Judgment:

“ 37. I was of the view that since the domestic helper was living with the wife and serving her instead of the husband, it is only natural that such future salary should be paid by the wife directly to the domestic helper. There is no requirement in the MPS Order for the husband to continue to pay the domestic helper’s salary. What the husband should do is simply stop paying the domestic helper’s salary after he has started paying the MPS to the wife.

38.  The husband also criticised me in including the domestic helper’s salary in the backdated amount.  I suppose that this is a criticism of double counting.  This may be true to an extent but we have to bear in mind that the amount of MPS arrived at is necessarily an estimation after adopting a broad-brush approach. There will be future adjustment if it is found that such estimation was indeed incorrect.  I am not prepared to grant leave to appeal simply on this relatively small sum and I am not satisfied that the husband has any reasonable prospect of success in his intended ground of appeal.” 

20.  In our view, the Judge’s analysis was impeccable.  There is no reasonable prospect of success in this ground.

Ground 3

21.  In her Skeleton Submissions, Ms Chan criticized the Judge in that he failed to form a view on issues in dispute, i.e., whether there was an agreement between the parties on the separation of finance.  It was also argued that there was a risk that the Court would not be able to adjust any over payment through the substantive order to be made.

22.  With respect, we do not find this ground meritorious.  It was plainly right for the Judge to say that it was not appropriate to form any preliminary view on whether the parties had really agreed on separation of finances, or whether the Court will be in a position to adjust any over or under payment in the final ancillary relief order: see §20 of the Leave Judgment.

23.  Furthermore, the Judge highlighted in the Leave Judgment the following important facts which had been taken into account:

“ 21. Firstly, there is no dispute that the wife has been residing in the former matrimonial home (at Tai Koo Shing) with the husband at least up to the latter’s departure in 2017. The former matrimonial home was registered under the name of a company in which the husband was the sole shareholder. There is equally no dispute that the husband has been paying the outgoings of the former matrimonial home, including the provision of a domestic helper for the wife’s use. In addition to that, the husband has also at one stage provided the wife with a company credit card with credit limit of $50,000 per month. These are all evidence pointing to the fact that the husband has been maintaining the wife, albeit not by way of monthly cash payment, and thus casting doubts on the husband’s claim of separation of finances.

22.  Furthermore, this was a long marriage of 24 years (1993-2017).  At the end of the day, it may not be easy for the husband to argue against some sharing of, at least, the former matrimonial home which has a net value of over $11 million.  Any over payment of MPS can always be set off against the wife’s interest in the property.”

24.  In this application, the husband failed to identify any errors in the above observations of the Judge.  We do not find it reasonably arguable that the Judge was wrong in this respect.

25.  Ground 5 has no independent arguability. For the above reasons, we refused to grant leave to appeal against the MPS award of $60,000 per month to the wife.  We also dismissed the application for stay of execution regarding that order.

Ground 4 and 5 on litigation funding

26.  Having considered the submissions of counsel, we gave leave to appeal as regards litigation funding under Grounds 4 and 5.

27.  As held in footnote 1 in Man Lin Heung v 梁根林 [2019] HKCA 846, admission of fresh evidence is a matter for the Court of Appeal after leave has been granted.

Stay of execution for litigation funding

28.  Though we have granted leave for the appeal against the order for litigation funding, it does not mean that husband will succeed in persuading the Court that no order for litigation funding should be made at all.  The wife deposed in the 4^th affirmation that the UK property is being used by the elder son as residence and she is not able to procure a mortgage on the property to fund the litigation.  The husband has yet to reply to such evidence.

29.  We were also aware that solicitors for the husband have not put all the evidence in the court below before us.  In particular, we do not have the Form E and Form H of the parties.  The wife will amend her Form H and her solicitor shall explain the mistake in an affirmation.

30.  On balance, we were not satisfied that the appeal would be rendered nugatory if a stay is not granted.  We were not minded to grant a stay in the present circumstances.  The husband is expected to make payment according to the order of the Judge in the meantime.

31.  It seemed to us that it was more appropriate to expedite the appeal.  We gave directions to facilitate the appeal to be heard before us on 14 January 2020.

32.  Before we end this judgment, we would reiterate that matrimonial disputes should be resolved in an effective, timely and proportionate manner.  We are glad that counsel indicated that the parties are willing to continue with mediation and, if that fails to achieve full resolution of the dispute, to go for mediator-assisted FDR.  As pointed out in the hearing, mediation will only be effective if the relevant disclosure has been made.  The Family Court should be informed and the Judge can give the appropriate directions.

33.  At the same time, we note that according to the statements of costs, the parties have incurred costs of more than $500,000 in total for this leave application.  Solicitors should explain to their respective clients how much more costs would have to be incurred for the appeal and explore with them the realistic options on litigation funding.  In light of what had been said in the course of the hearing before us, counsel should be able to provide better advice and guidance to the parties on a more sensible attempt to resolve the question of litigation funding by negotiation.  The time and money that the parties have to devote to the preparation of the appeal on litigation funding can be more usefully spent on efforts to resolve more crucial issues in ancillary relief.