Maintenance Pending Suit & Legal Costs Provision

Judge: Mr. Chan, I have reviewed this case very carefully and, taking a broad-brush approach, I have decided to award your wife $10,000 a month maintenance.
Mr Chan: I must say, in all the circumstances, that’s very generous and fair of you your honour – and every now and then I’ll try to send her a few dollars myself.


General Principles

In cases where, as is usually the case, a husband and wife have separated prior to the hearing for a divorce one of the parties may be in a position whereby they cannot financially support themselves fully. In this case following the divorce hearing it would be likely that the other partner would be required to pay maintenance especially where children are involved. An application for Maintenance pending suit (MPS) merely allows this to be done from the early stages of the divorce process. In this case maintenance will be required to be paid ‘pending suit’ by the spouse (usually the husband) who is the main bread-winner.

Given MPS is an interim order and time is limited the court is compelled to take a “…broad view of [the] means on the one hand and income on the other and come to a rough and ready conclusion” – F v F (Maintenance Pending Suit) (1983) 4 FLR 382, per Balcombe J at 385.

In Hong Kong the law governing MPS applications is relatively settled and straightforward. Guided by statute, the general principles and approach of the courts to MPS applications are similar in almost all cases. Of course as with any case the outcome and any given award of MPS is always dependent on the facts and circumstances before the court. But given it is ‘pending suit’ and therefore only an interim award the courts will always take a broad-brush approach and will rarely if ever hear evidence at this stage. MPS applications are therefore essentially a paper exercise. Not that this necessarily deters some applicants (and even some lawyers) from trying to squeeze blood from a stone. But whilst any given outcome or award is always fact-dependent the guiding principles are the same in all cases.

If one looks at the many judgments cited by the Family Court it is possible to glean a common approach – on any given set of facts – to the proper allocation of spousal maintenance (which may include provision for legal fees) prior to final settlement of the main ancillary relief application. One of the leading Court of Appeal judgments in in this area is  HJFG v. KCY, [2012] 1 HKLRD 95. This was on appeal from the decision of Poon J. HCMC 11 of 2010 and was a case where at first instance the award for MPS was the highest ever in Hong Kong at HK$ 2 million per month.

The judgment of the Court of Appeal in HJFG v KCY is obviously now one of the leading judgments on the law and general approach to the allocation of MPS but it relates to a so-called ‘big money’ case. Most of the many hundreds of MPS applications that come before the Family Court involve more modest sums and it is also worth looking at a more ‘typical’ case in trying to understand how the courts usually approach more run-of-the-mill applications. The following, general discussion of the law on MPS (slightly edited by me), has been taken from the judgment of DDJ Lo in CNLC v LTY  FCMC 16895/2011. There is no particular reason to choose this case as an example over many others but it represents an approach, which in my view, is typical of the general approach of the Family Court in many of its myriad reported decisions taken over the past few years. Click on the link for the full judgment.

CNLC v LTY

The Law

Under MPPO Section 3 (maintenance pending suit) and Section 5 (provision for child), the Court may make orders requiring one party in a marriage to pay maintenance for the other party from the date of the presentation of the petition for divorce and for the other for the benefit of children of the marriage for such term as may be so specified.

The main governing principle is that the Court will make such order as it considers reasonable based on the reasonable needs of the Wife (as is usual but not necessarily the case where the wife is the main bread-winner) and any child (if any) and the ability of the Husband to pay.  In view of such application being interim in nature, the Court will not conduct detailed investigation of the financial position of the parties, but approach on a broad brush basis.

Regarding the principles that underpin such an application, paragraph 16.17 of Rayden, LexisNexis Butterworths, 18th edn, Vol. 1(1) states as follows:

“The court has an unfettered discretion to award such sum as it thinks reasonable. There is no hard and fast rule, and no fixed proportion: each case depends on its own facts. It has been said that the approach to maintenance pending suit should be empirical, and that in the ordinary sort of case the district judges who deal with these applications will have to take a broad view of means on the one hand and income on the other and come to a rough and ready conclusion, or to take a “broad brush approach”.  The overall consideration is the actual needs of the parties’ pending suit.”

The court will also be looking at whether the applicant has an immediate need for financial support. Paragraph 16.18 of Rayden states as follows:

“…what really matters is the immediate and reasonable requirements of the wife balanced against the ability of the husband to pay for them, assessed using a broad-brush approach.”

Another important factor in determining this application is consideration of the marital standard of living during marriage. In a recent Hong Kong Court of Appeal case HJFC v KCY, CACV127/2011 (28 October 2011) Hartman JA said in para 37 of the Judgment as follows:

“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 High Court judge, in TL v ML and Others (Ancillary Relief: Claim against Assets of Extended Family) [2006] 1 FLR 1263, at 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:

i.   The sole criterion to be applied in determining the application is ‘reasonableness’, which is synonymous with ‘fairness’.

ii.   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.

iii.  In every maintenance pending suit application there should be a specific maintenance pending suit budget which excludes capital or long-term expenditure, more aptly to be considered on a final hearing.  That budget should be examined critically in every case to exclude forensic exaggeration.

iv.  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.” (emphasis added)

In particular, where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed, but where the position of the outsider is ambiguous or unclear, then the Court is justified in assuming that the third party will continue to supply the bounty, at least until final trial.


Legal Costs Contribution

The Wife contends that she requires funds to be properly represented in this litigation.  She is now asking for the sum of HK$50,000 a month towards her costs contribution.

The guiding principles of costs allowance found in Currey v Currey (No 2) [2007] FLR 946 are to be adopted in HJFG v KCY whereby Hartman JA said:

“79. Aside from the fundamental requirement of supplying a sufficiently detailed breakdown of anticipated costs, I am of the view that the following principles articulated by Wilson LJ in Currey should in future be adopted as providing prudent guidance to both judges and practitioners in this jurisdiction.

80.  In the view of Wilson LJ, the initial, overarching inquiry should be into –

“…whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means. Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services.”

81.  As Wilson LJ pointed out, satisfying that condition alone may not be sufficient.  In the broad exercise of discretion, a judge may consider that other factors must come into play –

“The subject matter of the proceedings will surely always be relevant; and, insofar as it can safely be assessed at so early a juncture, the reasonableness of the applicant’s stance in the proceedings will also be relevant.””

Wilson LJ further said in paragraph 20 of the judgment in Currey [2012] 1 HKLRD 95:

“…Furthermore, not to forget the third of Thorpe L.J.’s three features, she has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery.  I would add, fourthly, that the court needs also to be satisfied that there is no such public funding available to the applicant as would furnish her with legal advice and representation at a level of expertise apt to the proceedings…”

  • See also on the general approach to MPS applications in

YS v TTWD FCMC 676/2011

  • See these two articles from the always excellent Family Law Week here & here on approach to MPS applications in the UK – the English Rules are different from Hong Kong but generally the same principles will be applied here.

Jurisdiction
An applicant for maintenance pending suit (MPS) may seek a ‘costs allowance’ to meet the ongoing expense of legal representation.

See Litigation Funding (matrimonial and non-matrimonial proceeding) see R,ER v H, IF [2018] HKFC 229, [2018] HKFC 229, (12 December 2018

In the ‘seminal decision’ 1 of A v A [2001] 1 FLR 37712, the wife faced a quandary: she had been legally aided without contribution but, following the part-payment by the husband of an order for MPS, her legal aid certificate had been discharged. At the time of the hearing, the wife had incurred £40,000 costs on a private basis and expected to incur a further £50,000 to trial. Since the validity of the marriage was in dispute, the wife could not borrow against her expectation of ultimate capital recovery. In awarding MPS of £7,750 per month until the determination of the suit (and upon the wife’s undertaking to pay £4,000 of the sum punctually to her solicitors), Mr Justice Holman held that: “the words of s 22 [MCA 1973] are wide enough to empower the court to include an element towards the payee’s costs of the suit provided it is reasonable to do so” (at p 383)

The legitimacy of a ‘costs allowance’ came under a ‘full-scale attack’ in G v G (Maintenance Pending Suit: Costs) [2002] EWHC 306 (Fam); [2003] 2 FLR 71, where the husband asserted that the court lacked the jurisdiction to extend ‘maintenance’ to cover payments towards legal costs. After a comprehensive review of statute and case law, and consideration of the Barras principle of statutory interpretation, Mr Justice Charles concluded

“A v A is correctly decided and therefore I have jurisdiction to include an element to cover the wife’s legal costs of the ancillary relief proceedings in the award of maintenance pending suit.” (at [41])

Subsequently, it has been established that a ‘costs allowance’ is not a ‘costs order’, and so falls outside the provisions of FPR 2.71, e.g. that there will generally be no order as to costs3. Although usually sought within ancillary relief, recent authority suggests an element of legal costs may also be sought in applications under Sch. 1 of the Children Act 19894.

Applicable Guidelines
When will the court make a costs allowance, and in what circumstances?

In A v A, the court held that ‘in an appropriate case’5, a costs allowance could be made. In Moses-Taiga v Taiga [2005] EWCA Civ 1013; [2006] 1 FLR 1074, the Court of Appeal held that, “…only in cases that are demonstrated to be exceptional that the court will consider exercising the jurisdiction” (per Thorpe LJ at [25]). Subsequently, in TL v ML [2005] EWHC 2860 (Fam); [2006] 1 FLR 12636, Nicholas Mostyn QC, sitting as a Deputy High Court Judge, suggested the following interpretation of the word ‘exceptional’ [at 128]:

“[In Moses-Taiga] Thorpe LJ speaks of the power only being exercised in ‘exceptional cases’. I would be surprised if he intended by that remark to impose the need to demonstrate anything beyond the requirements that he had previously mentioned, namely, that the applicant: (1) had no assets; and (2) could not raise a litigation loan; and (3) could not persuade her solicitors to enter into a Sears Tooth v Payne Hicks Beach7 charge. The combination of those three factors would, to my mind, make the case exceptional.

In Currey v Currey (No. 2) [2006] EWCA Civ 1338; [2007] 1 FLR 946, the Court of Appeal clarified the law, per Wilson LJ:

“[19] I consider that the word ‘exceptional’ is obstructing the proper exercise of the jurisdiction to include a costs allowance; and I am convinced that Thorpe LJ never intended that it should do so…

[20] In my view the initial, overarching inquiry is into whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means. Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services. Furthermore, not to forget the third of Thorpe LJ’s three features, she has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery. I would add, fourthly, that the court needs also to be satisfied that there is no such public funding available to the applicant as would furnish her with legal advice and representation at a level of expertise apt to the proceedings, i.e. that the applicant does indeed in that regard fall within the unserved constituency referred to by Thorpe LJ in the statement quoted at para [1], above.

[21]   Although in making a costs allowance the court has a discretion, I cannot imagine that it would be reasonable to exercise it unless the applicant had thus duly demonstrated that she could not reasonably procure legal advice and representation by any other means. That, I venture to suggest, is, in effect and as a matter of common sense, a necessary condition of making an allowance. But I certainly do not consider that it will always be a sufficient condition… at this stage other factors may well come into play which will no doubt on occasions lead the court to decline to make it notwithstanding the demonstration. The subject-matter of the proceedings will surely always be relevant; and, insofar as it can safely be assessed at so early a juncture, the reasonableness of the applicant’s stance in the proceedings will also be relevant. So also will a variety of other features, including of the type which exist in the present case, in particular the arresting fact that the husband already owes £46,000 to the wife in respect of costs.” (my use of italics)

Procedure
The procedural steps in applying for MPS are set out in the first Part of this article. There are no specific rules concerning applications for costs allowances. However, it is suggested that where a costs allowance is sought, a sworn statement should be filed to set out the applicant’s case as to why she cannot otherwise reasonably procure legal advice and representation.

Following Currey (No. 2) (see above), a sworn statement should explain:

i) firstly, why the applicant’s assets cannot be reasonably deployed to meet the litigation costs;

ii) secondly, what efforts have been made to raise a loan to meet the litigation costs;

iii) thirdly, why the applicant cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery (see Sears Tooth (A Firm) v Payne Hicks Beach (A Firm) [1997] 2 FLR 116). In TL v ML, Nicolas Mostyn QC commented:

“The second and third requirements make the applicant prove a negative in each instance. In order to prove the inability to raise a litigation loan, I would have thought that production of correspondence between her solicitors and at least two banks eliciting a negative response would suffice. A simple statement from her solicitors stating that they were not prepared to enter into a Sears Tooth v Payne Hicks Beachcharge should ordinarily deal with the third requirement.” (at [129])

iv) and fourthly, that public funding is not available which would “…furnish her with legal advice and representation at a level of expertise apt to the proceedings” (Currey (No. 2), per Wilson LJ at [20])

Having met these ‘necessary’ conditions, the applicant would be well advised to address why the ‘sufficient’ condition, i.e. why the court should exercise its discretion (see para. 21 of Wilson LJ’s judgment in Currey (No. 2) above). There should also be some explanation as to the amount sought by way of costs allowance.

The Order
Since the court has no jurisdiction to make orders in favour of third parties such as the applicant’s solicitors (Burton v Burton and Another [1986] 2 FLR 419), the applicant should undertake to pay promptly such sum as represents the costs allowance to her solicitors. A costs allowance can be backdated to the date of the petition.

Duration of a Costs Allowance?
Should a costs allowance continue to the conclusion of the suit or an earlier stage, such as FDR? In Currey (No. 2), Wilson LJ commented:

i) that with regards to the duration of the costs allowance:

“…whenever a court decides to make a costs allowance, ought to proceed with a judicious mixture of realism and caution as to both its amount and its duration… . The FDR appointment is a watershed and all reasonable inducements to both parties there to negotiate positively in the light of informal judicial indications should be in place. The knowledge of a spouse in receipt of a costs allowance that, absent settlement at or in the immediate aftermath of the FDR, she will have to apply for a further allowance, which may or may not be granted, seems to me to amount only to a reasonable inducement, as opposed to improper pressure, to reach settlement.” (at [28])

ii) however, after an unsuccessful FDR, the judge could not hear an application to extend or vary an existing costs allowance. FPR 2.61E(8) provides that the judge could have no further involvement other than giving further directions. In the opinion of Wilson LJ,

“To extend a costs allowance by further variation [at FDR] … would be otherwise than to give a direction for the future course of the proceedings” (at [29]).

iii) accordingly, a costs allowance may be limited until FDR, after which the applicant could renew the application to a judge who had not conducted the FDR (and who would have no knowledge of any privileged offers).

The Final Reckoning
How should the court factor in a costs allowance where (as in most cases), the ultimate order is that there should be no order as to costs (FPR 2.71(4)(a))? In Currey (No. 2), Wilson LJ commented

“…insofar as the objection in principle to a costs allowance has previously been cast in part upon an argument that it pre-empts the normal despatch of issues as to costs at the conclusion of the proceedings, such an argument will largely fall away by virtue of the new rules. The proper treatment of liabilities for costs thereunder will generally be that they are debts to which the judge should have regard in making his substantive award; and so in my view an allowance for costs within an award of maintenance in the circumstances which I have sought to outline would be consonant with the movement under the new rules to cater for costs at an earlier stage than hitherto.” (at [32])

Conclusion
In summary, when seeking a costs allowance:

i) It is suggested that a sworn statement should be prepared that demonstrates why he or she could not reasonably procure legal services by other means;

ii) In particular, the applicant should address the ‘necessary conditions’ set out in Currey (No.2) as well as the ‘sufficient condition’, i.e. why in the circumstances of the case, the court should exercise its discretion in his or her favour

iii) Evidence in support may assist, e.g. letters from banks refusing loan finance and from the solicitors explaining that a Sears Tooth agreement is not available;

iv) Accordingly, whilst the test is not ‘exceptional’, the applicant must satisfy the court in a number of respects before the court will exercise its discretion.

Alexander Chandler
1 Garden Court
Temple
London

1 Per Wilson LJ in Currey v Currey (No. 2) [2006] EWCA Civ 1338; [2007] 1 FLR 946 at [14]
2 Full title: A v A (Maintenance Pending Suit: Provision for Legal Fees) [2001] 1 FLR 377
3 Per Wilson LJ in Currey v Currey (No. 2) [2006] EWCA Civ 1338; [2007] 1 FLR 946 at [32]
4 See M-T v T [2006] EWHC 2494 (Fam); [2007] 2 FLR 925, cf. W v J (Child: Variation of Financial Provision) [2003] EWHC 2457 (Fam); [2004] 2 FLR 300
5 Per Holman J at p 387
6 Full case name: TL v ML and Others (Ancillary Relief: Claim Against Assets Of Extended Family) [2005] EWHC 2860 (Fam); [2006] 1 FLR 1263
7 Sears Tooth (A Firm) v Payne Hicks Beach (A Firm) and Others [1997] 2 FLR 116.

Nominal Maintenance – A ‘Peg’ After Trial

Obtaining an order for nominal maintenance is the only way to preserve a spouse’s right for going back to the court for financial provision should the spouse does not have a good case for maintenance at the time of the application.

L v L [1962] P. 101

Willmer J. in the Court of Appeal said this, “In my judgment, once an application for maintenance has been dismissed by the court, jurisdiction does not exist to entertain a fresh application. I entertain no doubt that this was the position on the law as it stood before the Act of 1958. Were it not so, there would be no point in following the regularly adopted practice of making a nominal order in favour of a wife for the purpose of preserving her right to claim maintenance in the future, where it is not possible to show any present ground for awarding maintenance. For where a maintenance order is in existence, application can always be made to vary it in accordance with section 28 of the Act of 1950. In Mills v. Mills Sir Wilfrid Greene M.R. said: “the proper, and indeed the only, method of preserving some right in the wife, in such circumstances, was to provide what I have called a peg upon which subsequent applications could be hung. Such a peg could be provided by making an order for periodic maintenance, in a nominal sum, which order would remain in force and would be susceptible of variation if the circumstances called for it. But, in the absence of such a peg no future order could be made.” A little later he said: Once the order is discharged, the jurisdiction of the court “disappears.”