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Mcyp v Cwyw

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date19 December 2022
Neutral Citation[2022] HKCA 1891
Year2022
Subject MatterMiscellaneous Proceedings
CourtCourt of Appeal (Hong Kong)
Judgement NumberCAMP444/2022
CAMP444/2022 MCYP v. CWYW

CAMP 444/2022

[2022] HKCA 1891

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 444 OF 2022

(ON AN INTENDED APPEAL FROM FCMC NO 11432 OF 2018)

___________________

BETWEEN
MCYP Petitioner
and
CWYW Respondent

___________________

Before: Hon Cheung and Yuen JJA in Court

Dates of the Written Submissions: 26 October 2022 and 9 November 2022

Date of Judgment: 19 December 2022

____________________

JUDGMENT

____________________

Hon Yuen JA (giving the Judgment of the Court):

1. On 26 October 2022, the Petitioner (for convenience, hereinafter referred to as “the Husband”) filed a summons (“the Summons”) in this court making:

(1) a renewed application for leave to appeal the decision of Deputy District Judge R. Chow (“the Judge”) given on 12 August 2022 (“the Decision”) ordering him to provide litigation funding to the Respondent (“the Wife”), and

(2) an application for stay of execution pending the determination of the renewed application for leave and (if leave is granted) the determination of the appeal.

The Judge refused the Husband’s application for leave to appeal on 13 October 2022. Having considered the documents filed by the parties[1], we are of the view that it is appropriate to deal with the application on paper.

Background

2. The Husband and the Wife were married in 1995. They are now in their late fifties. They have 3 children aged between 19 and 25 (“Children”). The two younger children are receiving education overseas. There is no information in the papers before us whether the eldest is still receiving education. In the Husband’s Form E (filed on 14 May 2019), it was said that the eldest child would be graduating from university in June 2020 and would be likely to work upon graduation.

3. The Husband was born into a very wealthy family. His father died in the 1980s, having established successful businesses in land development and banking. Apart from one listed company TS Land Development Ltd (“TS Land”) of which the Husband is a director, the family wealth is held in various private companies, including one called KC & Co Ltd (“KC”) of which he is also a director, in which the Husband and his siblings hold shares. Although the memorandum and articles of KC have not been placed in the application bundle, there appears to be no dispute that the shares are not freely transferable. In his Form E,[2] the Husband stated that the net value of his assets was HK$370 million, of which HK$304 million was attributable to his 25% shareholding in KC.

4. The Husband filed a petition for divorce on 5 September 2018. A decree nisi was granted on 11 July 2019.

5. A consent order was made on 30 November 2018 (“the Consent Order”). Pursuant to this Order, the Husband shall pay the Wife maintenance pending suit (“MPS”) at HK$120,000 per month [§1]; and he also gave the following undertakings regarding payments (there are other undertakings providing for the Wife’s use of an overseas property [Recital F] and the matrimonial home in Hong Kong [Recital G], with domestic helpers and drivers [Recital H]):

- to pay the education and living expenses of the Children [Recital C];

- to directly settle credit card expenses for the Children up to a maximum of HK$60,000 per month [Recital D];

- to directly pay expenses for 11 flights a year on first class and 5-star hotel accommodation for the Wife [Recital E];

- to directly settle Chinese medicine and consultation fees for the Wife up to a maximum of HK$90,000 per month for 12 months [Recital I];

- to directly settle credit card expenses for the Wife up to a maximum of HK$300,000 per month [Recital (J)]; and

- to directly settle the Wife’s reasonable expenses at 5 clubs [Recital K].

In relation to the above, it would be noted that the Husband’s Answer (filed on 21 January 2020) to the Wife’s 1st Questionnaire stated that TS Land and/or KC have provided to the Husband as director’s fringe benefits various benefits including:

- accommodation (not including the overseas property),

- domestic helpers and drivers,

- education allowances for the Children,

- overseas travelling expenses for the Husband and his family,

- medical expenses and

- club expenses.

In other words, the Husband would not have to pay these expenses out of his own pocket.

6. As mentioned earlier, the Husband filed his Form E on 14 May 2019.

7.1. On 20 August 2021, the Wife took out a summons to apply for an order that from that date until further order or the end of the Financial Dispute Resolution (“FDR”) hearing, the Husband do pay to the Wife a monthly sum of HK$420,000 as “litigation cost allowance to cover the [Wife’s] legal costs”.

7.2. The Wife’s case was that she was financially dependent on the Husband (which was not disputed), and that she had already incurred, and expected to continue to incur, substantial costs for leading and junior counsel and solicitors (collectively “the lawyers”) and a forensic accountant. The outstanding costs due to the lawyers and the forensic accountant were approximately HK$600,000 and the following additional costs (totaling HK$5.29 million) were estimated:

- General Handling (lawyers): HK$800,000;

- Duxbury-calculation related costs (lawyers and accountant): HK$1 million;

- Companies’ valuation, and discovery and third party discovery applications (lawyers and accountant): HK$1.65 million;

- Litigation funding application (lawyers): HK$840,000;

- FDR Hearing (lawyers): HK$1 million.

The Wife’s estimate therefore was that another HK$5.89 million would be incurred up to the end of the FDR hearing. We would add as a matter of completeness that it appears from the Judge’s decision refusing leave [§35] that since the date of the Decision, the discovery applications have been heard, and appellate proceedings are under way.

8. The Husband’s case was that the bulk of his assets consists of shareholdings in private family companies which restrict the transfer of shares to non-family members. Pre-petition, he had limited and manageable debts, but post-petition the family has been living far beyond their means – “in part due to litigation costs but also in part due to the [Wife’s] extravagant overspending and litigation strategy” (Husband’s Skeleton for Leave to Appeal, §7). He had been relying on loans from KC, but it has pressed him for repayment. He also contended that the Wife’s estimate of costs is unreasonably high.

The Judge’s Decision

9. The Judge noted that the litigation funding application was not opposed by the Husband on the ground that the Wife could afford her legal costs (§40). He identified two issues for determination of the application: (1) the Husband’s ability to pay and (2) the reasonable amount to be ordered (§41).

10. In relation to issue (1),

- the Judge was of the view that the concern from KC about the Husband’s ongoing financial liabilities was just “a gesture” (§57), and that as KC was a family company closely connected to the Husband, it would keep on financing him (§§58-59);

- the Judge also found that the Husband had liquid assets in the amount of HK$14.35 million at his disposal. In his Form E, he said he had securities worth HK$20 million. He had pledged HK$15 million worth for overdraft facilities with a bank, for which he owed the bank HK$5.65 million. Accordingly, he had free use of securities worth HK$14.35 million, comprising of HK$5 million worth of unpledged securities, and HK$9.35 million worth for unused facilities. That sum of HK$14.35 million would be sufficient to cover the Wife’s claim for litigation funding (§51).

The Judge therefore concluded that the Husband had the ability to pay for the Wife’s litigation funding (§60).

11. In relation to issue (2), the Judge was satisfied that this is a big-money case (§72). The Judge was of the view that substantial costs would be inevitable before approaching the FDR hearing, as the parties apparently have very strong differences in their views over the value of the Husband’s assets (§78). After considering the breakdown of the Wife’s estimate of costs (§§16 and 75), the Judge accepted the estimate as reasonable (§79). The Wife had assumed that it would take 14 months to the FDR hearing (§10) but the Judge considered that it may take a longer time for the case to reach the FDR hearing (§84). In the end, the Judge ordered the Husband to pay to the Wife a sum of HK$350,000 per month as litigation costs allowance from the date of the Wife’s summons to the FDR hearing (§86). This works out at an additional period of (slightly less than) 3 months to get to the FDR hearing (HK$420,000 x 14 months = HK$350,000 x 16.8 months = HK$5,890,000 approximately).

Intended grounds of appeal

12. In this application, the Husband advanced the following 6 intended grounds of appeal:

(i) In view of the Husband’s actual income, expenses and his undertakings under the Consent Order, the Judge wrongly found that the Husband had the financial resources to pay the Respondent HK$350,000 per month as legal costs provision. (“Ground 1”)

(ii) The evidence did not...

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