FSM v. BDS AND OTHERS

FCMC 12749 / 2016

[2019] HKFC 258

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 12749 OF 2016

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J U D G M E N T
(Preliminary Issues and Section 17 Application)

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Introduction

1.  This is the petitioner’s (“the wife’s) application for  determination of the beneficial ownership of a property disposed by the 1^st respondent (“the husband”) after filing of the petition. The wife also applies for an order that such transaction be set aside pursuant to section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“the MPPO”).

Background

2.  The wife and the husband were lawfully married in Hong Kong on 10 December 2006. The wife and the husband were 40 and 46 respectively at time of trial. They gave birth to a pair of twins in 2009.

3.  The wife has been a full time house wife since 2008 and was financially dependent on the husband.  During the marriage, the husband worked in the financial industry. In or about 2012, the husband decided to set up various businesses. He has been an entrepreneur and a director of at least 5 private companies. The husband was also an advertisement part-time model. 

4.  In or about August 2010, the wife discovered the husband has had an extra-marital affair with a female (“Madam Yang”) in the mainland.  The affair with Madam Yang continued and resulted in an illegitimate daughter born on 20 November 2014. While appeasing the wife, the husband promised her to stay in the marriage and provided her with financial security by adding the wife as an account holder of his bank account.

5.  In or about October 2015, the wife discovered the husband has continued his extra-marital affair with Madam Yang, their relationship further broke down. The husband left their matrimonial home shortly after February 2016, they separated. 

6.  On 4 October 2016, the wife petitioned for a divorce on  ground of behavior.  On 14 December 2016, a decree nisi was granted. On 12 January 2018, by consent, both the husband and wife were granted joint custody of the two children; sole care and control to the wife and defined access to the husband.

7.  On 7 February 2017, the wife applied for maintenance pending suit against the husband. The trial of the wife’s application was heard by Deputy District Judge R. So. The learned judge made an order in her judgment delivered on 3 January 2018 that the husband shall pay maintenance pending suit and interim maintenance to both the wife and two children in sum of HK$150,000 on a monthly basis (“interim maintenance order”).  

8.  The husband failed to comply with the interim maintenance order, the wife took out a judgment summons on 1 December 2017.

The wife’s application

9.  The wife’s present application came about because the husband did not disclose the property in issue, a flat of a multistoried building in Hong Kong (“the KT Mansion”) in his Form E. This property was purchased by the husband and the husband’s stepfather (“the stepfather, the 3^rd respondent”) in 2001. They were joint tenants.  

10.  The stepfather paid up the purchase price of KT Mansion in sum of HK$3,800,000. It has no mortgage.  On 10 December 2013, both the husband and the stepfather sold KT Mansion at a price of HK$14,800,000. The husband’s mother (“the mother, the 2^nd respondent”) signed the sale and purchase agreement for and on behalf of the husband and the step-father on the strength of a power of attorney.  The mother continued to handle the sale of KT Mansion, it was completed on 20 January 2014.  The mother received proceeds of sale in sum of HK$13.3 million.

11.  On the day of signing the sale and purchase agreement of KT Mansion, the mother and step-father signed another sale and purchase agreement to purchase another property in Hong Kong (“the Tai Po Property”).  An initial deposit of HK$1.6 million was paid to the vendor of the Tai Po Property.  On 11 February 2014, to complete the purchase of Tai Po Property, the mother and stepfather jointly signed the assignment and had paid the balance of purchase price of HK$14.4 million to the vendor. It is not in dispute the mother had applied the proceeds from the sale of KT Mansion to the said purchase.  

12.  Both the mother and his step-father had subsequently purchased in the joint names two other landed properties in Central and Stanley, Hong Kong.

13.  On 28 March 2017, the wife took out a summons for an order of joinder of the husband’s mother and the stepfather as the 2^nd and 3^rd respondents. Such application was granted on 10 May 2017.  

14.  The wife sought an order to set aside a disposition of a KT Mansion pursuant to section 17 of the MPPO together with determination on the issue of its beneficial ownership, the sale proceeds and subsequent purchase of another property with that proceeds.

The husband’s case

15.  The husband explained KT Mansion does not belong to him, it was purchased by the mother and the step-father. The husband did not contribute to the purchase price, he merely held the property on trust for his mother with no beneficial interest. He emphasized the stepfather paid for the price of KT Mansion.   

16.  The husband did not live in KT Mansion, neither did the wife nor the children. The mother and step-father decorated the flat with their own ideas, they purchased furniture to fit the premise.  Both of them had lived there as their matrimonial home until they move to Tai Po Property in 2014.

17.  The husband further explained, the mother was a United States citizen, she intended to avoid potential tax consequence in US, she then requested the husband to be named as the registered owner of the KT Mansion.  The stepfather thought he could purchase KT Mansion with his own name, the husband could assist the purchase by executing a power of attorney to the husband. As a result of the discussion, three of them decided to purchase KT Mansion by the step-father and the husband as joint tenants. The stepfather then executed a power of attorney in favor of the husband and he handled all the documentations of the purchase.

The issues

18.  The wife’s application consisted of two claims which are based on the same set of facts. It is the wife’s case that KT Mansion was meant to be a gift by the mother to the husband. The wife accepted this is not a case of express gift, she relied on inferences to be drawn at time of the purchase.

19.  The husband’s defence is premised on “common intention constructive trust” where the husband has held KT Mansion for both the mother and the stepfather. The husband pleaded, in the alternative, “presumption of resulting trust” where he has held KT Mansion on trust for the stepfather.

20.  The first issue is to determine whether the husband has beneficial ownership in KT Mansion. I have to come up with a finding on the common intention of the husband, the mother and the step father when KT Mansion was purchased. The wife’s application will come to an end if the common intention of purchasing KT Mansion was the husband to hold his share on trust for the mother.

21.  The 2^nd limb of the wife’s application came into the scene when I have found the above issue in favour of her.  Pursuant to section 17 of the MPPO, I shall then determine whether the sale of KT Property should be set aside.  Whether the disposition of the sale proceeds of the KT Property, i.e. by transferring to the mother or the stepfather shall be accounted for the as part of the matrimonial asset.

22.  Or in the alternative, as the proceeds of the sale of KT Mansion has been deployed towards the purchase of Tai Po Property by the mother and the step-father, I shall decide whether the husband shall have beneficial interest in the Tai Po Property or any part of it.

23.  Both the wife, husband, the husband’s mother and step-father testified.

Applicable legal principles

Beneficial ownership

24.  The law on beneficial ownership is well settled. Hon Lam J (as he then was) gave a thorough account in his judgment Chan Chui Mee v. Wong Sau Kin & ors, HCMP 1904 of 2005, 19 September 2008.

16. In the recent case of Stack v Dowden [2007] 2 AC 432, the House of Lords re-examined the law in this area.  That was a case on beneficial ownership when the property was held under joint names.  It was held that since Lloyds Bank v Rosset [1991] 1 AC 107, the law has moved on.  The key is to identify the common intention of the parties.  Baroness Hale said at para. 60,

“The search is to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it.”

17. It was also held that in the search for common intention, a holistic approach should be adopted in the quantification of the beneficial interest by undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intended.  

18. At para. 69 of the judgment in Stack, Baroness Hale identified many factors in addition to financial contributions that the court should take into account in a domestic context to divine the parties’ true intentions.  Her Ladyship further said at paragraph 70 that the list is not exhaustive.”

……

“24. The first stage is to examine whether there is a common intention that the claimant should have a beneficial interest in the property. The dicta of Lord Bridge in Lloyds Bank v Rosset [1991] 1 AC 107 at p.132-3 was held to be pertinent to this stage of the enquiry but not to the second stage (see para. 48 of Oxley). At para. 68 of Oxley, Chadwick LJ said,

“…the first question is whether there is evidence from which to infer a common intention, communicated by each to the other, that each shall have a beneficial share in the property.  In many cases … there will have been some discussion between the parties at the time of the purchase which provides the answer to that question.  … In other cases --- where the evidence is that the matter was not discussed at all --- an affirmative answer will readily be inferred from the fact that each has made a financial contribution.  … And, if the answer to the first question is that there was a common intention, communicated to each other, that each should have a beneficial share in the property, then the party to who does not become the legal owner will be held to have acted to his or her detriment in making a financial contribution to the purchase in reliance on the common intention.”

25. Once the common intention as to beneficial ownership is established, the second stage is to ascertain the extent of the parties’ respective interests in the property. At para. 69 of Oxley, Chadwick LJ set out the approach to be adopted in answering this question.

“… in many such cases, the answer will be provided by evidence of what they said and did at the time of the acquisition.  But, in a case where there is no evidence of any discussion between them as to the amount of the share which each was to have … the question still requires an answer.  It must now be accepted that … the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property.  And, in that context, ‘the whole course of dealing between them in relation to the property’ includes the arrangements which they make from time to time in order to meet the outgoings … which have to be met if they are to live in the property as their home.”

26. After examining three strands of reasoning identified from earlier cases, His Lordship found it artificial to attribute to the parties a common intention to fix the extent of beneficial interest as from the time of acquisition when all evidence points to the conclusion that they had given no thought to the matter. He continued to say at para. 71,

“… in the absence of evidence that they gave any thought to the amount of their respective shares, the necessary inference is that they must have intended that question would be answered later on the basis of what was then seen to be fair.”

27. In Stack v Dowden [2007] 2 AC 432, the House of Lords endorsed the two stage approach, see paras. 61 and 63. This is further highlighted by Baroness Hale in Abbott v Abbott [2007] UKPC 53 at para. 4.

28. Baroness Hale stressed that the burden is on the party who alleges that the beneficial interest is not vested in the same manner as the legal interest in a property to establish the same, see paras. 54, 56 and 68.

29. As far as the second stage is concerned, Baroness Hale preferred the expression of the test of quantification in the Law Commission Discussion Paper on Sharing Homes to the formulation of Chadwick LJ. The preferred test is as follows,

“If the question really is one of the parties’ ‘common intention’, we believe that there is much to be said for adopting what has been called a ‘holistic approach’ to quantification, undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intended.”

See also Abbott v Abbott [2007] UKPC 53 at para. 6.

30. It is important to have regard to what Her Ladyship went on to say at para. 61 to account for such preference,

“First, it emphasizes that the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. Second, therefore, it does not enable the court to abandon that search in favour of the result which the court itself considers fair. For the court to impose its own view of what is fair upon the situation in which the parties find themselves would be to return to the days before Pettitt v Pettitt [1970] AC 777 without even the fig leaf of section 17 of the 1882 Act.”

25.  On the same issue, I also seek assistance from a recent case by HH Judge Sharon D. Melloy in WSS v. DKPA, FCMC 9725 of 2012, 15 July 2014,

“15. Thus it seems to me that in the first instance the court is asked to ascertain whether or not there is an express statement of beneficial interest with respect to this property. In the event that there is not, as seems to be the case here, then the court is required to determine whether or not there was a tacit understanding with respect to that ownership. In doing so I am asked to view the whole history of the ownership of the property holistically and over time. In particular I am asked to examine the parties conduct with respect to the property. I also accept that it is important to guard against the benefit of hind sight when going through this exercise.

16. In the event that it is not possible to ascertain a “tacit understanding” then the court then look to presumptions to assist in reaching a decision. Even then a presumption – is just that – a presumption that can be displaced depending on the available facts. Thus I do not necessarily accept that this is simply a “resulting trust” case as was boldly suggested by the wife’s counsel in his closing. Rather it seems to me that this is a case to determine a preliminary issue about ownership where there are a number of potential trust issues.

17.       In looking at this final stage I accept that I may pose the question – what is reasonable and fair in the circumstances as they have developed, seeing that they are circumstances which no one contemplated before? In considering this question it seems to me that the only factor which is new is the proposed divorce. This was certainly not contemplated previously. Thus the issue of hindsight also comes into play and should likewise be guarded against. Lastly – even if a presumption can be made it can of course also be rebutted in the light of the actual factual evidence before the court.”       

Section 17 application

26.  The relevant Section 17(1)(b) of the MPPO provides that :

“Where proceedings for relief under any of the relevant provision of this Ordinance are brought by a person against any other person, the court may, on an application by the applicant – …

(b) if it is satisfied that the other party has, with the intention [of defeating the claim for financial provisions] made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the order …”.

27.  In Kemmis v Kemmis (Welland and Others, Interveners) [1988] 1 WLR 1307, “intention” is well depicted in the following judgment.

“1326 …What is the meaning of “intention” in section 37(2) of the Act of 1973? Upon this question we had little if any assistance from counsel, although I understood Mr. Trace to concede that a disposition might be reviewable even though not made with the sole intention of defeating the wife's claim for financial relief. But how far does that concession go? Does the husband's intention to defeat the wife's claim have to be the dominant intention? Or is it sufficient that it was part of his intention? Is “intention” divisible at all? A man may act from mixed motives. But can he have mixed intentions? I do not find these questions easy. As in other branches of the law, the more one seeks to analyse the meaning of the word “intention” the harder it becomes.

In the present context three things are, I think, plain. First, we are concerned with the husband's intention in a subjective sense. It is his state of mind which we have to investigate, not the consequence of his acts. This much at least is clear from section 37(5) of the Act, whereby the relevant intention is presumed if the disposition has the relevant consequence, but only if the disposition is less than three years before the date of the application, and then only unless the contrary is shown. Secondly, as in every case where we are called on to investigate a person's intentions, the court is necessarily thrown back on inference. It will be a rare case where the spouse declares his state of mind in advance, and even then his declaration would not be conclusive, or even very persuasive, unless it is against interest. Thirdly, in determining whether a spouse has the requisite state of mind, a court may have regard to the natural consequences of his act. It is true that there is no presumption, unless section 37(5) applies. Nor, generally, would the natural consequence of the disposition be enough by itself to support an inference of intention. But the natural consequence of the disposition would certainly be a factor to be taken into account in deciding whether or not to draw the inference of intention in any given case.”

“1330….I agree with Purchas and Lloyd LJJ that what the judge had to find was a subjective intention on the part of the husband. Moreover, I think it clear that it did not have to be his sole or even his dominant intention. It was enough if it played a substantial part in his intentions as a whole. If it were otherwise, section 37(2) would fail to catch the case where a husband makes a disposition with the dominant intention of gratifying his mistress and only the subsidiary intention of defeating his wife's claim for financial relief. I feel sure that that was not the intention of Parliament…”

Analysis

The purchase of the property

28.  The burden rests with the husband to prove common intention.

29.  The wife testified, since they were dating in 2003 – 2004, the husband mentioned to the wife that he was one of the owner of KT Mansion. The wife heard from the husband a number of times that the KT Mansion was his.  She recalled, the husband said the entire KT Mansion will be his eventually because he was the only son of the family. At all times, she did not request the husband to name her as one of the owner of KT Mansion.

30.  From the time of purchase KT Mansion until it was sold in late 2013, the husband made known to the wife KT Mansion was used primarily as a family resort for the mother and the step-father when they were in town; or for other family members or friends to stay whenever they visited Hong Kong.  Both the wife and the husband have their own place to live, the idea to move in KT Mansion has never come across their mind.

Both the wife and the husband paid visits to the mother in KT Mansion when she was in town.

31.  The wife perceived gifting of properties is not an unusual event within the husband’s family. The husband’s family is a well off. The husband was gifted a commercial property by his grandfather. In earlier days, both the wife and the husband co-habited in an apartment provided by the grandmother. The husband’s grandmother funded the husband HK$1,000,000 for the husband to paid the for the purchase price of their first matrimonial home.  Because of this, the wife believed KT Mansion was gifted to the husband by the mother.

32.  I accept the wife’s evidence on what has been said between the husband and herself.  The husband as one of the registered owner of KT Mansion, it is not surprising the wife had formed a belief KT Mansion was the husband’s property. Nevertheless, the husband has only mentioned the fact that he was one of the registered owner of KT Mansion, he was quite right to say KT Mansion will be his eventually because he was the only son.

33.  I then consider the evidence of the subjective mind of the husband, the mother and the stepfather, they bear the burden to prove intention.

34.  Both the husband and wife were still in their courtship in 2001 when KT Mansion was purchased. The reason to purchase KT Mansion was purely an idea from the husband’s family. The wife has no participation nor did she give any comments about the purchase.  I accept KT Mansion was meant to be used by the mother and the stepfather when they are in town. It was also planned for a place to accommodate relatives and friends of both the mother and the stepfather’s extended families when they came to Hong Kong.

35.  The next issue is the reason why KT Mansion was purchased in this way - the husband and the stepfather as joint tenants. The evidence revealed the husband, the mother and the stepfather trusted each other. It might be the intention of the mother and the stepfather to have named as the registered owner of KT Mansion, save and except the mother, being a US citizen, has some concern of her tax consequence in the US if she had purchased property in her own name. She explained she was not in town at time of purchase. I find her request reasonable and logical to seek help from the husband, her only son, to assist her to be named as a registered owner of KT Mansion.

36.  The husband deposed in his affirmation that the mother requested him to hold half share of the property. The husband explained at time of acquisition of KT Mansion, he had only modest income and would not be able to purchase the property. His intention at time of acquisition of the property would be holding half share on trust for and on behalf of the mother. It was never the intention of the mother to allocate the share of KT Mansion by way of gift to him.

37.  I aware at the material time, the husband was in his twenties, a graduate from college. I accept the husband would be out of means to purchase KT Mansion or any property without the aid of others. During the course of giving evidence, I see the mother has been a cautious person. Her plans and thoughts were always clear; her actions were swift. She frankly answered during cross examination, the husband is her only son, she had trusted the husband to hold her share and to be named as one of the registered owner of KT Mansion. Coupled with the fact that the mother, having tax consequences in mind and also she was not yet in town, it would more probably than not that she has intended to ask the husband to hold the KT Mansion for and on her behalf at time of purchase.  

38.  The stepfather was married to the mother in 1993. He had children with his ex-wife but not with the mother. The stepfather was working in a Switzerland company, he was a frequent traveller. In or about 2000, the mother’s father was very ill, the mother wished to relocate in town to take care of him. The stepfather and the mother therefore decided to settle down in Hong Kong. The stepfather resigned from his job and had set up his own company in Hong Kong afterwards. Both the mother and the stepfather looked for a home in Hong Kong and they had purchased KT Mansion. The stepfather explained, at time of purchase, the mother was staying in Sweden and it would be troublesome for her to travel to Hong Kong to complete the purchase. They came up with an idea that “to put the husband’s name as joint tenant”. The stepfather then executed a power of attorney in favour of the husband. The husband agreed to handle all documentation of the purchase.

39.  The stepfather further said, he and the mother made decisions  on renovations and decorations. They chose furniture themselves. Both the stepfather and the mother stayed in KT Mansion whenever they were in Hong Kong. It was only in 2014, the stepfather and the mother sold KT Mansion and then moved to Tai Po Property.

40.  I give weight to the evidence that the stepfather up-fronted the entire payment of HK$3,800,000 to complete the purchase. The particulars were as follows:

(i)    the stepfather transferred an initial deposit of HK$114,000 from his bank account in Hong Kong to the purchaser at time of signing the provisional sale and purchase agreement on 28 August 2001;

(ii)    the stepfather further transferred HK$266,000 to the purchaser at time of signing the formal sale and purchase agreement on 10 September 2001;

(iii)    the stepfather paid stamp duty in sum of HK$85,710 from his bank account on 10 September 2001;

(iv)    the stepfather transferred HK$3,500,000 from his bank account to the mother for the payment of balance of purchase price, legal fees, commission fees and other expenses on 12 September 2001;

(v)    the mother arranged to issue a cashier order in sum of HK$3,420,000 for the above payments on 13 September 2001;

(vi)   the purchase of the KT Mansion was completed on 28 September 2001; and

(vii)   the mother paid HK$38,000 agency commission on 3 October 2001.

41.  The stepfather further clarified in his evidence that KT Mansion might have some illegal structures and both the mother and himself had decided to ask the husband to be one of the registered owner. He recalled, the mother’s citizenship never came across his mind when determining this issue.

42.  The stepfather responded right away that he had not pay much attention whether to hold KT Mansion as joint tenants or tenants in common with the husband. The stepfather simply said he did not have thought about it. I see from this evidence that the stepfather trusted the husband.

43.  I agree with the stepfather it was not the common intention to gift the husband KT Mansion at time of acquisition. I note the purchase was paid in full by the stepfather. The husband has no means to purchase a property as such when he was just a college graduate earning a monthly salary of HK$28,000. Both the wife and the husband did not live in KT Mansion. I regard the act to name the husband as a registered owner, to hold the mother’s share was a joint decision of all three of them. The husband had not taken the mother’s share as his.  The stepfather explained he has 3 children from his ex-marriage, it would definitely not his intention to gift the husband the mother’s share of KT Mansion. It was only out of practicality that the stepfather, the mother had decided to acquire KT Mansion in this manner. The stepfather made it clear that he would not share the proceeds with the husband even when KT Mansion was to be sold.

44.  I accept both the evidence of the stepfather, the mother and the husband. I consider it was the reason, out of practicality that the husband was named as a joint tenant of the property. It is more probably than not that the family decision was meant to be the husband, holding his share of KT Mansion for and on behalf of the mother. It was a simple family consensus without taking into account whether both the stepfather and the husband to be named as joint tenant or tenants in common.

45.  I find the shared, actual, inferred or imputed intention between the husband, the mother and the stepfather in this family context was the husband to hold KT Mansion as joint tenant for and on behalf of the mother. The tactical understanding to render KT Mansion as a gift to the husband had never come across the mind of the mother and the stepfather. Upon this understanding, the mother has acted to her detriment that the stepfather has made a financial contribution to purchase in reliance to the purchase. The husband was also well aware of intention that his share of KT Mansion was not his. To conclude, the husband has no beneficial interest in KT Mansion.

46.  The wife’s application shall end.

Resulting trust

47.  Be it an issue in the defence, I see no importance here upon the determination of common intention above.

Section 17 application

48.  For completeness sake, I shall deal with the wife’s section 17 application.

49.  In or about September 2015, the wife learned the ex-marital affair of the husband and Madam Yang by reading the husband’s whatsapp messages.  The husband continued to stay with Madam Yang after the wife found out about her. In March 2016, the wife relayed the husband’s ex-marital affair to the mother, the mother replied the wife that the husband had already told her about the affair with an illegitimate daughter born as early as January 2015.

50.  The wife alleged the mother had decided to sell KT Mansion around one year after she had knowledge of the husband’s ex-marital affair. The wife articulated timing of the sale of KT Mansion is of particular relevance. The wife said KT Mansion was sold in December 2013; Madam Yang was pregnant in early 2014; she gave birth to the husband’s illegitimate daughter in November 2014.

51.  The wife believed the husband had been stalling since she found out about his extramarital affair with Madam Yang. She perceived the husband could take the time to dispose assets. She believed the husband had withdrawn money from his bank account before adding her name as an account holder. The husband left his well-paid job with over HK$80,000 per month and chose to go on allegedly unsuccessful business ventures. The husband lastly disposed KT Mansion, the landed property in his name. 

52.  The wife drew an inference that the act of husband (the mother or the stepfather) to sell KT Mansion was aiming to defeat her ancillary claim in this matrimonial suit.

53.  The mother and the step father denied that they had knowledge of Madam Yang at time of sale of KT Mansion. The mother and the stepfather had only learnt the husband’s ex-marital affair in November 2015 which was more than one year after the sale of KT Mansion.  I share the view of both the mother and the stepfather it is too far fetch to draw an inference that the sale of KT Mansion by the end of 2013 was intended to defeat the wife’s claim of ancillary relief against the husband when Madam Yang was pregnant only in early 2014.

54.  Whilst investigating the intention of subjective mind of the husband is always difficult, in this family context, KT Mansion was treated as the matrimonial home of the mother and the stepfather. The mother has legitimate reason to sell it. At time of sale, the mother has settled in Hong Kong and was able to handle the sale herself. I accept the mother’s explanation to have moved to Tai Po Property and to spend more time to take care of her father who was very ill at that time.

55.  I recall in the mother’s evidence, she stated her strong view towards the marriage of the wife and husband. She said firmly the husband was an adult and he should have solved his own problem. The mother did not involve in the family relationship actively between the wife and the husband.

56.  I refer to my finding that the husband has no beneficial interest that KT Mansion, there would be no disposition of matrimonial asset on the part of the husband accordingly. The wife’s application under this head failed.

The Orders

57.  With reasons of the foregoing, I make the following orders:

(i)    The wife’s (the petitioner’s) summons filed on 28 March 2017 be dismissed.

(ii)    The wife (the petitioner) do pay the costs of the wife’s (the petitioner’s) summons filed on 28 March 2017 to the husband (the respondent), with certificate for counsel, to be taxed if not agreed.

(iii)   The wife’s (the petitioner’s) own costs be taxed in accordance with Legal Aid Regulations.

(iv)   The 1^st appointment be fixed on 29 November 2019 at 10:30 am in Court 11 with 15 minutes reserved.

(v)   Both the wife (the petitioner) and the husband (the respondent) do appear personally.

FCMC 12749/2016
[2018] HKFC 1

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO 12749 OF 2016

________________________

________________________

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J U D G M E N T
(Maintenance pending suit and variation of interim interim maintenance)

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The Application

1.  By the summons dated 7^th February 2017, the petitioner wife (“the Wife”) applied for herself and for the two children of the family, both aged 8 now (“the 2 Children”), against the 1^st respondent husband (“the Husband”):-  

(a) for maintenance pending suit in the monthly sum of HK$127,733 and asked for the payment be backdated from 4^th October 2017;

(b) that the Husband shall continue to pay directly for the rental and carpark of the Wife’s residence, salary of the domestic helper, the transportation expenses to school of the 2 Children, the school fees of the 2 Children and the insurance premium for the Wife and the 2 Children (ie. total sum of about HK$66,934 (HK$31,800 + HK$6,000 + HK$2,668 + HK$23,900 + HK$854 + HK$1,712)); and

(c) costs.

2.  The Husband opposed to her application and filed the affirmation in opposition on 2^nd May 2017 (“the Husband’s 1^st Affirmation”).

3.  By the order of His Honour Judge I. Wong dated 27^th March 2017, it was ordered that the Husband do pay an interim interim maintenance pending suit to the Wife in the monthly sum of HK$50,000 and to the 2 children in the monthly sum of HK$50,000 respectively.

4.  At the hearing for the application for maintenance pending suit on 1^st June 2017, both the Husband and the Wife were legally represented by counsel.  As an open offer, the Wife proposed that the Husband do pay a monthly total sum of HK$158,501 for the Wife and the 2 Children as maintenance pending suit, with the Wife then agreeing to refrain from asking for any amount to be backdated. The Husband opposed to the Wife’s proposal and offered to continue paying a monthly total sum of HK$100,000 for the Wife and the 2 Children as maintenance pending suit, which was not accepted by the Wife.  

5.  During the argument hearing, counsel for the Wife, Ms Kwan, submitted to court and provided to Mr. Wong, counsel for the Husband, further written notes of hearing and tables (of up to 15 pages) supplementing her written submissions previously filed, which further explained the Wife’s stance that the Husband has the ability to pay, the allegation that the Husband has dissipated family funds and the Husband’s non-disclosure of his finance position.

6.  Submissions could not finish on 1^st June 2017 and the case was adjourned part-heard to 9^th August 2017.  During the adjourned period, the Husband applied for legal aid and the Court received the memorandum of notification of an application for legal aid dated 5^th July 2017. On 25^th July 2017, the Husband filed the Notice to Act in person. 

7.  On 8^th August 2017, that is one day before the part-heard hearing, the Husband took out an application for variation of interim interim maintenance pending suit (“the Husband’s Summons”) and filed an affirmation in support (“Husband’s 2^nd Affirmation”).  The Husband asked for the monthly interim interim maintenance to the Wife be varied from HK$50,000 to HK$2,000, and that for the 2 Children be varied from HK$50,000 to HK$20,000.

8.  During the 2^nd day of the hearing, the Husband attended the hearing acting in person and also confirmed with the court that the legal aid application had been refused.  Parties agreed that no legal aid stay would be needed and agreed that the court to hear the Husband’s Summons together without the need to file and serve any further affirmations. 

Background of the case

9.  The parties were married on 10^th December 2006.  The 2 Children both aged 8 now, were born in their wedlock, and are now attending the French International School.

10.  The Wife is now aged 40.  She has been a full-time housewife since about 2008 and she is financially dependent on the Husband.  The Husband is now aged 45.  He used to be employed by an international assets management limited company and a family trust company.  He has later become an entrepreneur and is now the director of 5 limited companies (“the 5 Companies”).  Since about 28^th March 2017, the Husband has been employed by a company as a Director of International Business, earning a monthly salary of HK$33,750.  The Husband is also a part-time model for advertisements.

11.  During the marriage, the family used to live at a rented flat at the Pacific Palisades of Braemar Hill Road (“the Former Matrimonial Home”).  The parties separated in February 2016.  In about November 2016, the Wife and the 2 Children moved to reside at the Island Resort at Siu Sai Wan. 

12.  The Wife initiated divorce proceedings on 4^th October 2016 on grounds of unreasonable behaviour.  Decree Nisi was granted on 14^th December 2016.

13.  By the order of the court dated 27^th March 2017, it was ordered that the Husband do pay an interim interim maintenance pending suit commencing 1^st April 2017 to the Wife in the monthly sum of HK$50,000 and to the 2 children in the monthly sum of HK$50,000 respectively.

14.  Although the Husband did not offer any undertaking to the court, Mr. Wong informed the court that by a letter from the Husband’s solicitors dated 5^th April 2017, the Husband’s solicitors had confirmed that the Husband would continue to make the following payments directly:- 

(a)  rental and carpark of the Wife’s residence (HK$31,800);

(b)  salary of the domestic helper (HK$6,000);

(c)  the school bus fees of the 2 Children (HK$2,668);

(d)  the school fees of the 2 Children (HK$23,900); and

(e)  the car expenses of the Wife (HK$2,000).

15.  The total of these 5 items amounted to HK$66,368.  In the said letter, the Husband proposed to deposit the remaining amount of HK$33,632 to the joint account of the parties on the 1^st day of each and every month until further order of the court.

16.  It is the Wife’s stance that the 5 items that the Husband had agreed to pay directly do not cover provision to the Wife for basic items such as food or household expenses.  The remaining amount of HK$33,632 could not cover all the expenses of the Wife and the 2 Children.  According to the Wife, she has been paying the difference with her own savings and borrowings from her mother, relatives and friends.  However, she has already exhausted her savings and can no longer borrow from relatives and friends further.  Therefore, the Wife has no options but to apply for legal aid and to take out the present application.

The legal principles

17.  Under section 3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“the MPPO”), the court may order either party to the marriage to make to the other such periodical payments for his or her maintenance and for such term, being a term beginning not earlier than the date of presentation of the petition or the making of the application and ending on the date of the determination of the suit, as the court thinks reasonable. 

18.  The legal principles governing any maintenance pending suit application require the court to balance the reasonable needs of the applicant spouse (and the concerning children where applicable) against the paying spouse’s ability to pay by using a broad brush approach.  In HJFG v KCY [2012] 1 HKLRD 95, the Court of Appeal has summarised the established principles as follows:-

“33. Jurisdiction to award maintenance pending suit to a spouse is statutory, being governed by the provisions of s.3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192. By that section the court is given a discretion to make an order requiring either party to the marriage to make to the other such periodical payments for his or her ‘maintenance’ as the court thinks ‘reasonable’, subject to the condition that the duration of any such order is limited to the period of what may broadly be called the divorce litigation.

34. By definition, therefore, maintenance pending suit is restricted to payments which constitute ‘maintenance’, which are reasonable in the circumstances and which will endure for no longer than it takes to determine the divorce litigation. ‘Maintenance’ is a broad concept. I do not seek to define its exact meaning but it seems to me that it must be restricted to those payments necessary to meet the recurring costs of living at whatever standard of living is appropriate. That being the case, no matter how great the wealth of the parties and how unevenly distributed that wealth may be at the time an application for interim maintenance is made, the court has no jurisdiction to make orders which for all practical purposes result in a form of pre-trial capital rebalancing. In the present case, the Judge recognised the long-established approach of looking to the ‘immediate and reasonable needs’ of the wife and son.

35. As to the amount of maintenance pending suit that may be paid, the Ordinance provides only that it must be ‘reasonable’, that is, having regard to the circumstances of the case, that it must be fair.

36. An important factor in determining fairness is a consideration of the martial standard of living. In this regard, each case must be considered according to its own circumstances. It is not simply to be assumed that great wealth equates to great extravagance. Some married couples who enjoy great wealth spend with comparative modesty and with a discipline born of discretion, others enjoy consumption on a grand scale.

37. The principles that have emerged over time to guide judges in matters of interim maintenance have been fashioned in the main to ensure fairness. This is well illustrated in the judgment of Nicholas Mostyn QC, sitting then as a Deputy Judge, in TL v ML [2006] 1 FLR 1263, 1289, in which, having looked at earlier authorities, he derived the following principles that speak specifically to fairness or are based on the need to ensure it. For present purposes, it is sufficient to cite the relevant principles without citing the Judge’s reference to the source of those principles:

(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. This 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 bedget 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.

38. Finally, it is to be noted that in applications for interim maintenance, when the amount to be paid is for a limited period only and not all of the evidence is necessarily before the court, it is not appropriate, nor indeed in most cases possible, for the court to conduct a detailed investigation into the finances of the parties.  While, in order to determine what is or is not reasonable, some analysis is always required, that analysis can be conducted on a ‘broad-brush’ basis.”

19.  It is also well established that in ancillary relief proceedings, which include maintenance pending suit, there is a duty on both parties to make full and frank disclosure of the relevant materials to enable the court to exercise its discretion to make the order, and if the court is of the view that the evidence disclosed by a party is deficient, inferences may be drawn by the court from such defective disclosure against that party when making the appropriate order.

Issues of the case

20.  Counsel for both sides agree the following are the issues for the court’s determination :-

(a)  How much maintenance pending suit to the Wife and to the 2 Children should be paid? (Issue 1)

(b)  Can the Husband afford to pay the sum? (Issue 2)

(c)  In the event that MPS is ordered, what date should that part of the order take effect from? (Issue 3)

21.  In the Husband’s Summons, he asks for variation of monthly interim interim maintenance to the Wife from HK$50,000 to HK$2,000, and that for the 2 Children from HK$50,000 to HK$20,000.  As the maintenance pending suit is yet to be decided, the issues to be considered and decided by the court for the Husband’s Summons are basically the same.

The wife’s case

22.  It is the Wife’s case that prior to the parties’ separation in February 2016, the Husband had been providing the following monthly to the Wife and the 2 Children :- 

(a) Monthly deposit of HK$23,000 (ie. HK$17,800 for the family expenses and HK$5,200 for the Wife’s personal expenses) into the joint account of the parties;

(b) Rent of the Former Matrimonial Home and car park space in the total sum of HK$36,000 per month, plus utilities of HK$5,320 per month and domestic helper of HK$5,950 per month;

(c) All children expenses including school fees, tuition, extra curricular activities and insurance premium in the sum of about HK$92,051 per month;

(d) The Wife’s insurance premium at HK$10,250 per year (ie. about HK$854 per month);

  (adding (a) to (d): a total monthly sum of HK$163,175)

(e) 2 credit cards with total credit limit of HK$100,000 per month; and

(f) Octopus card with automatic add-value service.

23.  According to the Wife, since about November 2016, the Husband has only continued to pay the following monthly :-

(a) The rent of the new apartment in Siu Sai Wan for the Wife and the 2 Children in the sum of HK$29,000, plus salary of the domestic helper at HK$6,000 per month;

(b) The school fees of the 2 Children in the total sum of HK$23,900 per month; and

(c) The 2 Children’s insurance premium in the sum of HK$1,712 per month.

  (adding (a) to (c): a total monthly sum of HK$60,612)

24.  Since the order dated 27^th March 2017, the Husband has been paying a monthly sum of HK$100,000 to the Wife and to the 2 Children, in the manner as explained in paragraphs 14 and 15 hereinabove.

25.  According to the Wife, since she and the 2 Children had moved out from the Former Matrimonial Home and started residing at the present address in Siu Sai Wan, she had reduced the expenses.  The Wife had updated the expenses for herself and for the 2 Children in the supporting affirmation, which added up to a total of HK$191,045 per month (with detailed breakdown explained in paragraph 34 hereinbelow). 

26.  It is the Wife’s stance that the expenses are reasonable, with reference to the standard of living they had enjoyed before the Husband and Wife separated. 

27.  In the alternative, the Wife proposed that on the basis the Husband continues to pay for all the items he has always been paying in the total sum of about HK$66,934 (with details referred to paragraph 1(b) hereinabove), the Wife asks for a sum of HK$127,733 to be paid to her as maintenance pending suit for herself and the 2 Children.

28.  According to the Wife, the following should be taken into consideration for the present application :- 

(a) the 5 Companies which the Husband being a director;

(b) the Husband’s expenses are much more than his alleged income and there are sums of HK$100,000 to $700,000 deposited into the Husband’s bank account by the Husband’s mother;

(c) the Husband’s income from his part-time work as a model;

(d) the Husband’s relationship with his mistress Madam Yang and the birth of his illegitimate daughter with Madam Yang in November 2014;

(e) the Husband had sold a property at Kowloon Tong Mansion in 2014 (“Kowloon Tong Property”), which he owned with his step father, ie. the 3^rd Respondent, as a joint tenant.  The Kowloon Tong Property was sold within 3 years preceding the date of petition for divorce and according to the Wife, the Husband did not account for the proceeds of sale.  The date the Kowloon Tong Property was sold was the same as the date another property at Hong Lok Yuen (“the Hong Lok Yuen Property”) was purchased with the Husband’s mother (ie. the 2^nd Respondent) and the 3^rd Respondent being the joint tenants;

(f) the Husband’s material non-disclosure about his finance. 

The husband’s case    

29.  The Husband’s case, in essence, is that he does not currently earn any money from the 5 Companies. He worked as a part-time model before, but as he was not very famous, he only earned about HK$10,000 to HK$15,000 for each job and would have about 1 to 2 jobs throughout the year.  He is now employed with a monthly salary in the sum of HK$33,750, with no bonus or double pay, and that is his only monthly income at the moment.  According to the Husband, he only supports his child with Madam Yang in the PRC at a minimum level. 

30.  It is the Husband’s stance that as he only had a modest income at the material times, and there was no way he could afford to pay the purchase price of the Kowloon Tong Property in 2011 and the subsequent purchase of the Hong Lok Yuen Property in 2014, which the Wife alleged the Husband has beneficial interest in.

31.  On the 1^st day of the hearing on 1^st June 2017, it is the Husband’s stance that he was not able to pay more than HK$100,000 per month as maintenance pending suit for the Wife and the 2 Children, and through his counsel, the Husband’s view is that the monthly sum of HK$100,000 is reasonable and affordable.    

32.  On the part-heard hearing on 9^th August 2017, the Husband said that he could not even afford to pay HK$100,000 per month as he had used up all his money.  With his monthly salary of HK$33,750, he could only afford to pay a total sum of HK$22,000 to the Wife and the 2 Children, as stated in the Husband’s Summons and the Husband’s 2^nd Affirmation.

33.  The husband further submitted that the court should take into consideration the following matters :-

(a) the Wife’s educational background and her earning capacity;

(b) the Wife should have looked for a job and ease the financial burden of the family;

(c) the Wife and the 2 Children should have lived at the home of the Wife’s parents in order to save money;

(d) the Husband had asked the Wife to look for a job in about 2013 when there was financial difficulties of the Husband, but the Wife refused;

(e) the Wife had withdrawn cash from the bank account jointly held by the parties in the sum of about HK$343,557.34;

(f) there was no non-disclosure of the Husband.

How much maintenance pending suit to the Wife and to the 2 Children should be paid? (Issue 1)

34.  The Wife has provided for the expenses breakdown in her Form E filed on 25^th November 2016, with the total expenses being HK$207,701 (general expenses of HK$79,450 + personal expenses of HK$36,200 + children expenses of HK$92,051).  She has further provided the updated breakdown in her affirmation in support filed on 10^th April 2017, as follows :-

For general expenses:-

Items	Amount HK$
Rent	31,800
Utilities	5,320
Food	18,000
Miscellaneous household expenses	6,800
Car expenses (gasoline of HK$4,000, tunnel and parking fees of HK$2,000 and insurance, licence fees and maintenance of HK$1,880)	7,880
Domestic helper	6,000
Total:	75,800

For personal expenses:-

Items	Amount HK$
Meals out of home	3,200
Transportation	2,500
Clothing / Shoes	2,400
Personal grooming	5,520
Entertainment	3,200
Holiday	3,760
Medical / Dental	6,000
Insurance premia	1,364
Total:	27,944

For children expenses:-

Items	Amount HK$
School fees	23,900
Extra tuition fees (Mandarin class of HK$7,000, French class of HK$2,500 and Chinese and Maths class of HK$2,900)	12,400
School books and stationery	1,600
Transport to school (including 2,700 school bus fees)	5,450
Medical / Dental (General medical and dental of HK$1,000 and speech therapy of HK$4,000)	5,000
Extra curricular activities -      Piano class and related expenses of HK$4,095 -      Ballet class and related expenses of HK$2,295 -      Tennis class of HK$2,360 -      Football class and training of HK$1,135 -      Drama class and related expenses of HK$1,785 -      Olympus maths training of HK$3,000	14,669
Entertainment	7,000
Holidays (about 4 holidays per year)	10,000
Clothing / Shoes	4,500
Insurance premia	1,712
Lunches and pocket money	400
Other transport	500
Uniform	170
Total:	87,301

35.  The updated total amount of expenses for the Wife and the 2 Children is HK$191,045 (HK$75,800 + 27,944 + 87,301).

36.  The Wife explained that these are reasonable amounts, with reference to the standard of living before the parties separated.  According to the Wife, the Husband had no problem financially in supporting the Wife and the 2 Children during the marriage.

37.  In the Husband’s 1^st Affirmation, he agreed that the family used to enjoy a very high living standard while he was working as an investment manager in an international assets management limited company and a family trust company between 2007 and 2010, and between 2010 and 2012 respectively.  While the Husband had been working to support the family financially, the Wife decided to cease working and become a full-time housewife to take care of the 2 Children with the aid of two maids initially when the 2 Children were younger (and later with 1 maid) and enjoy her personal life.

38.  According to the Husband, he explored different business opportunities in order to maintain the increasing monthly expenses of the Wife and the 2 Children, as he noticed that the limited income could not support the family in the long run. Therefore, between 2013 and 2017, the Husband decided to start up his own businesses with the connections that he built up while he was working as an investment manager.  However, it turned out that the businesses were not very successful and some of them even failed. 

39.  It is the Husband’s case that he had been asking the Wife to reduce the monthly expenses of hers and the 2 Children on one hand, and try to explore some new sources of income on the other hand, after the Husband quitted his job as an investment manager in about 2013.

40.  According to the Husband, the standard of living of the family had not been as high as alleged by the Wife, at least not after about 2013.  But the Husband did not deny that he has all along provided financially and sufficiently for the family as requested by the Wife and the 2 Children, and the Husband had agreed that the standard of living was not in issue for the present application. 

41.  For the present application, the court should not resolve factual disputes and should only take a broad brush approach in the determination of the reasonable sum with reference to the standard of living of the parties during marriage. 

42.  The educational background and earning capacity of both the Husband and the Wife will have to be investigated further in detail during the ancillary relief trial.  Whether the Wife should re-enter the labour market and find a job, especially when the 2 Children grow older, would no doubt be an area to look into during the ancillary relief trial.  But for the purpose of this application, with the Wife being a housewife since 2008 and the 2 Children are now aged 9, I accept, at the moment, that the Wife be a full-time housewife, assisted by a domestic helper.

43.  Whether the Wife and the 2 Children should move to live with the Wife’s parents would be another area that the trial judge has to investigate further and determine at the ancillary relief trial regarding the accommodation needs of the Wife and the 2 Children, which the court cannot resolve at this stage.  For the present application, I rule that the monthly rent to be paid is reasonable.

44.  Regarding the allegation of the Husband that the Wife had withdrawn cash from the bank account jointly held by the parties in the sum of about HK$343,557.34, the Wife has explained in her affirmation in reply filed on 22^nd May 2017 that there is nothing wrong to withdraw money from a joint account that the Husband had told the Wife that she could use the fund therein anytime for family expenses.

45.  There is no further evidence or supporting documents from the parties in relation to whether each of the items of expenses was reasonable or not.  Neither did the Husband or his Counsel made any specific comment or criticism about the Wife’s itemized expenses.  Ms Kwan asked the court to use the discretion, on a broad brush approach, to consider and rule on the reasonable sum.   

46.  The items of expenses provided by the Wife are estimates only and they are bound to vary from month to month.  The court can only rule on the reasonable and immediate needs, with reference to the standard of living during marriage on a broad brush approach, and to exercise discretion.  I notice that some items had been initially agreed to be paid by the Husband on the 1^st day of the hearing, which I would take that the Husband does not dispute they are reasonable items and reasonable sums.

47.  For general expenses, as the Husband had agreed to pay, in the open proposal, rental and carpark of the Wife’s residence in Siu Sai Wan in the sum of HK$31,800, the car expenses of the Wife in the sum of HK$2,000 and salary of the domestic helper in the sum of HK$6,000, I accept that those are reasonable expenses.

48.  I can accept utilities in the sum of HK$5,320 and miscellaneous household expenses in the sum of HK$6,800.

49.  About food under general expenses in the sum of HK$18,000, there is no breakdown as to how the Wife gets the figure.  With the Wife claiming meals out of home under personal expenses being HK$3,200 per month and the lunches and pocket money for the 2 Children only being HK$400, I rule that the reasonable sum for food under general expenses being HK10,000.

50.  About car expenses under general expenses in the total sum of HK$7,880, it is not in dispute that the family used to have a private car during marriage.  With the Wife and the 2 Children now residing at Siu Sai Wan, it is not unreasonable for the Wife to claim for car expenses as she has to drive the 2 Children.  According to the table of para. 15(a) of the Wife’s supporting affirmation, the car expenses are incurred mainly for driving the 2 Children.  That means other than taking the school bus, the Wife would be driving the 2 Children as well. 

51.  However, I notice that the Husband has agreed to pay HK$2,668 for the school bus fees for the 2 Children.  Having to drive the 2 Children to and from school, but not using or fully utilising the school bus service which the Husband has agreed to pay would be a waste of resources.

52.  Even if the Wife has to drive the 2 Children to and from school from time to time and also to drive them for extra-curricular activities, the car expenses and transportation expenses should not be as high as claimed by the Wife. 

53.  For the transportation to school under children expenses, the Wife claims HK$5,450, including school bus fees of HK$2,668.  The 2 Children are either going to and from school by school bus or driven by the Wife, I accept the reasonable sum of transport to school round up being HK$2,700.  I accept that other than the transport to school, there is the sum of other transport under children expenses in the sum of HK$500.

54.  Even if the car expenses are incurred mainly for driving the 2 Children, as the 2 Children also take school bus, the car expenses by the Wife should not be as high as HK$7,880.  It is noted that the Wife also claims HK$2,500 for transportation under personal expenses.  As a broad brush approach, I rule that the reasonable car expenses under the general expenses should be HK$4,000; with the Wife’s transportation expenses under personal expenses should be HK$1,000.

55.  For personal expenses, I rule the sum of HK$1,364 being insurance premia as reasonable.  I notice that the expenses for personal grooming is more than a double than the expenses for clothing / shoes.  I also notice that the Wife’s medical / dental expenses amounts to HK$6,000.  With no breakdown of items or further documents in support, and by adopting a broad brush approach, which the figures could be adjusted at the ancillary relief trial, I rule the reasonable and immediate needs of the Wife for meals out of home being HK$2,000; clothing / shoes being HK$2,000, personal grooming being HK$2,000, entertainment being HK$2,000; holiday being HK$3,000; and medical / dental being HK$3,000. 

56.  For the expenses for the 2 Children, the Husband had agreed to pay school fees in the sum of HK$23,900, school bus fees in the sum of HK$2,700 and insurance premia in the sum of HK$1,712, which I accept as reasonable items and reasonable amounts. 

57.  I accept lunches and pocket money in the sum of HK$400, other transport in the sum of HK$500 and uniform in the sum of HK$170.

58.  With uniform of the 2 Children in the sum of HK$170, and lunches and pocket money in the sum of HK$400 for the 2 Children, entertainment in the sum of HK$7,000 and clothing / shoes in the sum of HK$4,500 seem to be excessive.  I rule the reasonable and immediate needs for entertainment being HK$2,000 and for clothing / shoes being HK$2,000.  I also rule the reasonable sum for school books and stationery being HK$1,000. 

59.  For the expenses for holidays, as I have ruled the reasonable sum for the Wife being HK$3,0000 per month in average, the sum of HK$10,000 per month for the 2 Children seems to be excessive.  I rule the reasonable sum for holidays being HK$3,000.

60.  For the items of extra tuition fees, medical / dental and extra-curricular activities, as there is breakdown for these items and they had not been challenged or criticised, I accept the amounts stated by the Wife as reasonable.

61.  As a result, I rule the expenses of the Wife and the 2 Children as follows :-

For general expenses:-

Item	Amount HK$
Rent	31,800
Utilities	5,320
Food	10,000
Miscellaneous household expenses	6,800
Car expenses	4,000
Domestic helper	6,000
Total:	63,920

For personal expenses:-

Item	Amount HK$
Meals out of home	2,000
Transportation	1,000
Clothing / Shoes	2,000
Personal grooming	2,000
Entertainment	2,000
Holiday	3,000
Medical / Dental	3,000
Insurance premia	1,364
Total:	16,364

For children expenses:-

Item	Amount HK$
School fees	23,900
Extra tuition fees	12,400
School books and stationery	1,000
Transport to school (school bus fees)	2,700
Medical / Dental	5,000
Extra curricular activities	14,669
Entertainment	2,000
Holidays (about 4 holidays per year)	3,000
Clothing / Shoes	2,000
Insurance premia	1,712
Lunches and pocket money	400
Other transport	500
Uniform	170
Total:	69,451

62.  With the above individual items added together, the total sum is HK$149,735 (HK$63,920 + HK$16,364 + HK$69,451).  By adopting a broad brush approach, I apportion about half of the general expenses to the 2 Children and rule that the reasonable sum for the 2 Children being HK$100,000 and the reasonable sum for the Wife being HK$50,000.

Can the husband afford to pay the sum? (Issue 2)

63.  On the 1^st hearing on 1^st June 2017 when the Husband was legally represented, his counsel informed the court that he could not afford to pay more than HK$100,000 per month as maintenance pending suit for both the Wife and the 2 Children. 

64.  The Husband has provided for the expenses breakdown in his Form E filed on 8^th December 2016, with the total expenses being HK$106,250 (general expenses of HK$48,950 + personal expenses of HK$8,050 + children expenses of HK$49,250).   He has further provided his updated breakdown in the Husband’s 1^st Affirmation filed on 2^nd May 2017, as follows :-

Item	Amount HK$
Food	5,000
Public transport	2,000
Rent (living in mother’s house)	Free
Utilities	800
Mobile telephone plan	200
Clothing	1,500
Insurance payment	2,300
Medical expenses	200
Total:	12,000

65.  In the Husband’s 1^st Affirmation, he further explained that he was currently paying HK$100,000 to support the family as follows :-

Item	Amount HK$
Rental	29,000
Car park rental	2,800
Salary of domestic helper	6,000
Tuition	23,900
School bus fees	2,668
Fixed penalty and autotoll fees for Sabaru Forester	2,000
Sub-total:	66,368
Maintenance payable other than the above items	33,632
Total:	100,000

66.  On the adjourned part-heard hearing on 9^th August 2017 when the Husband acted in person, he said he could not even afford solicitors representing him. With his salary of HK$33,750 per month, he could not afford to pay the monthly sum of HK$100,000 that he previously agreed to pay.  According to the Husband, he could only afford to pay the total monthly sum of HK$22,000.

67.  In the Husband’s 2^nd Affirmation, he explained that the interim interim maintenance of a total of HK$100,000 was ordered by His Honour Judge I. Wong by a broad brush approach, considering that the Husband had some public trading stocks that worth approximately HK$700,000 in his stock account.  However, he would use up all his resources and he could barely have enough to pay up beyond July 2017.  According to the Husband, from August onwards, he could only be able to utilise his monthly salary in the sum of HK$32,250 (after deduction of MPF). 

68.  The Husband further explained that he could not retrieve any cash from Lab One Limited, one of the 5 Companies.  He emphasised that with his monthly salary, he could only afford to pay a monthly total sum of HK$22,000 to the Wife and the 2 Children. 

69.  It is the Wife’s stance that the Husband has much resources supporting his ability to pay and there is material non-disclosure of his finance.    

70.  Ms Kwan submitted that the court should consider the following regarding the Husband’s ability to pay :-

(a) Despite the Husband’s alleged financial difficulty, he purchased Chanel in the sum of HK$25,500 in August 2016.

(b) With reference to the table submitted by Ms Kwan on the 1^st day of the hearing, which summarises the cash flow of the Husband in his bank accounts, it is noted that there are more than HK$400,000 going into the HSBC account of the Husband and about HK$900,000 going into the BOC account of the Husband.

(c) The Wife questioned the reason why the Husband took on the present work with a monthly salary of only HK$33,750, with the background that the Husband used to earn much more in the past.

(d) The Wife is of the view that the Husband’s mother is a financial resource of the Husband.

(e) The Husband had removed money in the respective sums of HK$400,000 and HK$1,000,000 before adding the Wife to the jointly held bank account in October 2010.

(f) Despite the Husband’s alleged financial difficulty, he had transferred a total sum of RMB200,000 from 10^th August 2015 to 13^th January 2016 to Madam Yang, as shown in the statement of the BOC (China) account of the Husband.  Besides, on the Husband’s own admission in his Answers to the Questionnaires, sums of RMB80,000 and RMB 70,000 had been paid to Madam Yang in Nov 2015 and January 2016 respectively as repayment of her hospital fees and insurance for the daughter of the Husband and Madam Yang.

(g) From the end of 2015 and throughout the whole of 2016, the Husband had been dwindling funds.

71.  Besides, Ms Kwan also questioned the Husband’s allegation that no income was generated from the 5 Companies, gave examples that the Husband changed his Answers from the 1^st Questionnaire to the 2^nd Questionnaire, and also listed out in her written notes a number of the Husband’s questionable transactions in various amounts of several hundreds of thousands dollars. 

72.  I notice that there are a number of points raised by Ms Kwan that involve criticism of the credibility of the Husband.  I have reminded myself that at this stage, the court should not rule on substantive disputes of facts or credibility of the parties.  There should not be detailed investigation of the evidence regarding the finance of the parties, which should be left at the ancillary relief trial when the parties are given the chance to explain during cross-examination.  Instead, I should adopt a broad brush approach.  Notwithstanding that a broad brush approach is to be adopted, the court would still have to engage analysis on the basis of the evidence before it.

73.  Further, about the Husband’s ability to purchase the Kowloon Tong Property and the Hong Lok Yuen Property dated back in 2011 and 2014 respectively, and the Husband’s interest in those properties should be dealt with at trial for the preliminary issue, for which application had been already been made for the preliminary issue regarding the beneficial interest of those properties.

74.  Generally, for application for maintenance pending suit, it is not necessary to resort to the Questionnaire and Answer, as the court should be taking a broad brush approach.  But as the Questionnaires and Answers are already before the court during this hearing, I am entitled to consider the Answers which are now before the court, not for conducting detailed investigation, but to consider the application adopting a broad brush approach.

75.  According to the Wife, there is no full and frank disclosure of documents of the Husband, including the following :-

(a) In the 1^st Questionnaire, the Wife asked the Husband to provide BOC (mainland branch) statements since 2013.  The Husband only provided the print out from ATM for the past 2 years, as he “could not make it personally for the opening hours of the BOC branch in China” as explained in his Answer to Questionnaire.

(b) In the Questionnaire, the Wife asked the Husband to provide income proof, employment contract and tax return. The tax return of the Husband was not provided.

76.  Based on the evidence and documents before the court, not having to rule on the credibility of the Husband, I agree with Ms Kwan’s submissions that the Husband’s affidavit and Form E disclosure, including the provision of documents and information in his Answers is obviously deficient.

77.  Without disclosing those documents requested by the Wife, which may suggest that the Husband could have some other income, other than the monthly salary he now receives, especially in view of the background of the case and the past work experience of the Husband, adverse inference and robust assumptions could be drawn in relation to the Husband’s ability to pay.

78.  Leaving aside whether the 5 Companies are generating income for the Husband and whether the Husband had dwindled money, it is the Husband’s stance that he only earns a monthly income of HK$33,750.  However, it is trite law that the court is not confined to the mere say-so of the payer as to the extent of the his income or resources. 

79.  At the time the Husband’s 1^st Affirmation is filed on 2^nd May 2017, which is the affirmation in opposition to the Wife’s application to maintenance pending suit, the Husband has been receiving monthly salary of HK$33,750.  The Husband should know full well his financial position.  Yet, the Husband, through his counsel on the 1^st day of the hearing, offered to continue paying HK$100,000 to the Wife and the 2 Children.  The Husband should know full well that with his monthly income, he has to obtain money to continue paying interim maintenance for the family.  There is no substantial change of circumstances regarding the Husband’s finance, which he could not possibly anticipate, since he agreed to pay HK$100,000 per month back in June 2017.  It is surprising that shortly before the adjourned hearing, the Husband filed his 2^nd Affirmation, saying that he could no longer afford even the amount of HK$100,000 he had earlier agreed to pay.

80.  Regarding the Husband’s ability to pay and his financial resources, the support from his mother (ie. the 2^nd Respondent) could not be ignored.  From the Husband’s Form E and Answers to Questionnaires, he agreed that his mother has been assisting him with the family expenses in various sums.

81.  The Husband submitted that the money from his mother is loan, not gift, and there is no guarantee that his mother will continue supporting him financially.  As there is no evidence that the Husband has to repay or has repaid his mother, the money he has obtained from his mother, if not viewed as gift, could at least be viewed as soft loan.

82.  For the purpose of this application, I do not have to make a final finding on whether the money from the Husband’s mother are gifts or loans or soft loans.  These matters would be determined by the trial judge in the ancillary relief trial when oral evidence is received and tested.  It is trite law that the ability to borrow on the part of the paying party can be regarded as a means of financial resources that the court could consider for maintenance pending suit application. 

83.  What is more alarming is the amount of money the Husband has received from his mother throughout the years, be it gift, or loan or soft loan.  Without having to go into detailed investigation, according to the Husband’s Form E filed on 8^th December 2016, he has obtained a total sum of HK$3,427,500 as loan from his mother. 

84.  When being asked about details of these loans from his mother, the Husband clarified, by way of a table for the answer for question 14, in his Answer to the Wife’s 1^st Questionnaire filed on 17^th May 2017, that for the period from July 2014 to September 2016, a total sum of HK$3,683,300 was obtained from his mother, in numerous sums from several thousand dollars to up to HK$700,000. 

85.  The reasonable inference is that the Husband has the means to pay.  By using a broad brush approach, and in such a situation, the court should err in favour of the payee.  I therefore rule that the Husband has the means to pay maintenance pending suit in the amounts I have ruled.

86.  As a result of the analysis above, the application to vary the interim interim maintenance by way of the Husband’s Summons must fail.

In the event that MPS is ordered, what date should that part of the order take effect from? (Issue 3)

87.  The Wife asks for the amount of maintenance pending suit awarded be backdated to October 2016 when the Wife filed the divorce petition.

88.  Having ruled on the reasonable sum to be awarded as maintenance pending suit and the Husband’s ability to pay, I notice this is not the type of cases that the Husband has the amount available to be withdrawn or realised from his own bank or securities accounts.  I have ruled that the Husband has the ability to pay having considered his resources, mainly on the amount of money he has obtained and can reasonably be expected to obtain from his mother, and the robust assumption that he has the ability to pay .

89.  In view of the numerous factual issues in dispute, which should best be dealt with at trial, and in view of the open offer by the Wife, I am of the view that it is fair not to order backdating the amounts to be paid.

90.  I have to emphasise that the maintenance pending suit ordered is only an interim measure pending the substantive hearing, and that the amounts awarded could be reviewed retrospectively, so that any over or under-provision as a result of the maintenance pending suit order could always be rectified at the substantive ancillary relief hearing.

Conclusion

91.  I make the following orders :-

(a) The Husband do pay the Wife maintenance pending suit in the sum of HK$50,000 per month, with the 1^st payment to be made on or before 1^st day of February 2018 and thereafter on the 1^st day of each and every month and until further of the court.

(b) The Husband do pay the Wife maintenance pending suit for the benefit of the 2 Children in the total sum of HK$100,000 per month, with the 1^st payment to be made on or before 1^st day of February 2018 and thereafter on the 1^st day of each and every month and until further of the court.

(c) The above payments are to be deposited into the Wife’s designated HSBC account.

(d) The Summons filed by the Husband dated 8^th August 2017 be dismissed.

92.  Although the Wife does not succeed in all her claims for maintenance pending suit, the undeniable fact is that she has to come to court before she could get the maintenance pending suit as now ordered.  In the circumstances, I am of the view that it is fair for the Wife to get the costs of her application for maintenance pending suit, including all costs reserved. 

93.  In relation to the Husband’s application, as I have dismissed his Summons, there is no reason that costs should not follow the event.  As that Summons was heard together on the 2^nd day of the hearing, with no further affirmations filed by the Wife, I anticipate not much costs should be incurred as a result.

94.  I order that the Husband do pay the Wife costs of the Wife’s application for maintenance pending suit and the costs of the Husband’s application to vary the interim interim maintenance, including all costs reserved, to be taxed if not agreed.  Counsel certificate is also granted.  The Petitioner’s own costs be taxed in accordance with Legal Aid Regulations.  This is a cost order nisi, which shall be made absolute after the expiry of 14 days from the handing down of this judgment.