We acted for the Petitioner (“the Wife”) in the Hong Kong High Court case KCMA v ABC and others [2020] HKCFI 848. The Wife obtained litigation funds of HK$1,500,000 from the Family Trust.

Background

This was a high conflict case. It involved a lot of legal issues, including but not limited to two applications under section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) (relating to avoidance of transaction intended to defeat certain claims) and other ownership/trust issues.

In the present case, the Wife sought periodical payments to be applied towards her litigation funding from the Husband, or alternatively the Husband to cause distribution from the Family Trust, which was estimated by the Husband at HK$98,000,000. Both the Husband and the Wife were the beneficiaries of the Family Trust.

Legal Principles

The Court pointed out in its judgment that it has the power to include an element for legal costs provision in an order for maintenance pending suit under the MPPO. The Court cited the recent case WW and LLN [2020] HKCA 178, CACV 524/2019:

“The principles for granting litigation funding are well-established:

1. In order to obtain litigation funding, the burden is on an applicant to demonstrate that she cannot reasonably procure legal representation by any other means. […] To the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, either directly or as the means of raising a loan to fund legal services …
2. The subject matter of the proceedings and the reasonableness of the applicant’s stance in the proceedings will always be relevant.
3. The period over which costs allowance is to be paid is also relevant. If the application was made before the Financial Dispute Resolution (“FDR”) hearing, it may well be wise to order that the costs allowance should fund the applicant only up to that hearing. If the FDR fails, it would be for the new judge, on the basis of the materials properly before him, to determine whether a new allowance for legal costs should be granted and if so, in what amount.

The court should be alert to the risk of injustice arising from irrecoverable and/or unmerited sums paid for litigation funding, which would call for extra caution in the balancing exercise.

‘… the whole purpose of alimony pending suit is to sustain the petitioner pending the court’s determination. There is manifestly a risk of unjustified and irrecoverable payments, but that has to be balanced against the risk of a denial of access to justice for the petitioner, if she has not the means to sustain herself and the litigation pending its determination.'”

Court’s Decision

The Means of the Wife and the Husband

On the basis of the facts of the case and the abovementioned legal principles, the Court made the following findings in relation to the means of the Wife and the Husband:-

The Wife’s means – The Wife alleged that, during her 15 years marriage to the Husband, she was, and still is, a homemaker, and financially dependent on the Husband. She did not hold any assets of value. The Court was satisfied that the Wife did not have sufficient asset held in her name which can reasonably be deployed. Although there was no evidence that she had made any application for legal aid, given that she had received MPS and other financial resources from the Family Trust, the Wife would not have met the means test required to be passed when making an application for legal aid.

The Husband’s means – The Husband alleged that since he was unable to obtain any distribution from the Family Trust, he could not afford to pay the litigation funds sought by the Wife, nor his own legal costs.

The Court adopted a broad brush approach in considering the means of the parties, and came to the conclusion that there was no sufficient evidence to show that the Husband would be able to pay the Wife’s and his own litigation costs without receiving any distribution from the Family Trust.

The Family Trust

The Court then made findings on the distribution from the Family Trust. The Court pointed out that, in their letter correspondence, the solicitors for the parties have already suggested to use the distribution from the Family Trust as litigation funds for the Wife.

The Court was of the view that, given both parties were the beneficiaries, they could not cause any distribution of the Family Trust as this is within the discretion of the Trustee, but the Wife or the Husband could have simply agreed to the Joint Request for distribution from the Family Trust on a without prejudice basis.

Conclusion

During divorce proceedings, if one (e.g. the Wife in this case) does not have sufficient financial resources, but at the same time has to bear living expenses, children’s maintenance and litigation costs, one should carefully consider obtaining financial support (e.g. distribution from Family Trust in the present case despite the live issues arising from the settlement) in order to maintain a living and support the conduct of the legal proceedings.

This article is co-authored by our experienced Private Client Team – our Partners Catherine Por and Wendy Lam, and our Senior Associates Karl Wong and Calvin Lo. Please contact our Catherine Por or Wendy Lam for any further enquiries or information.

This newsletter is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage.

Mr. Terence Lau, Senior Associate of our Corporate Finance Department, hosted a CPD webinar for the topic “IPO101: An Overview of a Listing Offer” on 15 October 2020. In this course, Terence offered a detailed explanation of listing criteria as well as suitability for listing. The syllabus dissected IPO projects and included topics such as reorganisation, due diligence, prospectus drafting and share offer. The webinar also gave an overview of the IPO process pre-IPO investment.

Terence specialises in advising listing applicants, sponsors and underwriters in a broad range of corporate finance transactions, including initial public offering on The Stock Exchange of Hong Kong Limited, subsequent share issues, shares placement, rights issue, open offer and convertible bonds. Terence also advises listed issuers on regulatory and compliance matters.

Please contact Mr. Terence Lau for any enquiries or further information.

On 22 Oct 2020, our firm’s Partner and head of Litigation and Disputes Resolution department, Ms. Heidi Chui, was invited to be one of the judges of the 15th LAWASIA International Moot Competition.

The LAWASIA International Moot Competition aims to bring into the curriculum of law schools throughout the world. The focus of this year’s moot competition is Dispute Resolution, Commercial Law and Contract Law. Over 1,100 students from universities in Hong Kong, Singapore, Malaysia, Taiwan and Japan took part in the competition.

Our Partner Ms. Heidi Chui commented, “I am delighted to participate again as one of the panel judges for LAWASIA International Moot Competition. It is always a pleasure to see young talents and future lawyers sharpening their legal skills. I look forward to seeing these young faces again in the future stage of international arbitration”.

About LAWASIA

LAWASIA is an international organisation of lawyers’ associations, individual lawyers, judges, legal academics, and others that focus on the interests and concerns of the legal profession in the Asia Pacific region.

Please contact our Ms. Heidi Chui for more information or enquiries.

During 19 to 23 October 2020, our partners Willy Cheng and Lai Lam participated at the Interlaw 2020 Virtual Annual Global Meeting. This year’s topic was “Turning Resilience into Opportunity”.

INTERLAW is an elite global law firm network comprised of top tier independent law firms from over 120 cities worldwide. To enhance the relations of strategic partners, seminars and networking meetings are held regularly for members to discuss topical issues and latest legal developments.

Throughout the 5-day meeting, lawyers and professionals from across the world gathered virtually and discussed various legal topics covering different practice areas. During the meeting of Tax- Key International Developments in the COVID era, our partner Willy Cheng gave an overview on tax planning from the Hong Kong perspective. He explained why Hong Kong is the best venue for investing in China by illustrating the advantages of Hong Kong’s simple tax system such as low and competitive tax rates and in particular, no tax on dividends and capital gains, stable currency, free foreign exchange and a strong rule of law.

Our firm’s partner, Mr. Willy Cheng spoke on the topic of “Structuring for Success and Tax Planning for a New Era”.

On the 2nd day of the meeting, our partner Lai Lam who is the vice chair (Asia Pacific) of the Interlaw Diversity, Inclusion and Community committee, took part in a discussion on racism and building an inclusive law firm.

Please contact Mr. Willy Cheng or Ms. Lai Lam for further enquiries about this event.

Stevenson, Wong & Co. is proud to have been shortlisted as a finalist in 12 categories at the 19th Annual Asian Legal Business (ALB) Hong Kong Law Awards 2020.

Nominations include:

• BDO Award Matrimonial and Family Law Firm of the Year
• Civil Litigation Law Firm of the Year
• Criminal Litigation Law Firm of the Year
• Dispute Resolution Boutique Law Firm of the Year
• Labour and Employment Law Firm of the Year
• Private Wealth Law Firm of the Year
• Real Estate Law Firm of the Year
• Regulation and Investigations Law Firm of the Year
• Tax and Trusts Law Firm of the Year
• Transactional Boutique Law Firm of the Year
• Dispute Resolution Lawyer of the Year- Ms. Heidi Chui
• Woman Lawyer of the Year (Law Firm)- Ms. Heidi Chui

The Hong Kong Law Awards is the biggest and longest-running awards presented by ALB. The awards aim to pay tribute to the outstanding performance of private practitioners and in-house teams from Hong Kong and the region. Results will be announced at the award ceremony on 27 November 2020.

Please click here to view the full list of finalists.

For further information, please contact our Mr. Willy Cheng, Mr. Hank Lo or Ms. Catherine Por.

(中文) 2020年9月17日下午，本所合伙人，诉讼及争议解决部主管徐凯怡律师受Legal Plus邀请，担任「Legal Plus 意见领袖线上论坛：国际仲裁意见领袖线上论坛」 (Legal Plus Leaders Web-forums: International Arbitration Leaders Web-forum) 演说嘉宾。

本次线上论坛由Legal Plus主办，徐律师与来自亚洲、欧洲和中东地区的法律从业者、企业法总等参会人士分享如何运用内地与香港仲裁互助保全安排，最大化地收回债权利益 (Maximizing Recovery Through the Use of PRC-Hong Kong Interim Measures Arrangement in International Arbitration)。

如阁下想了解更多详情，请联络本所合伙人徐凯怡律师 (heidi.chui@sw-hk.com)。