SIU WAI MING v. SHIU WAI HONG AND OTHERS

FCMC 11846/2007

[2021] HKFC 185

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11846 OF 2007

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J U D G M E N T

(Variation of order)

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Introduction

1.  There are three applications before the court that now require adjudication. These are as follows:

i)  Firstly, the Petitioner wife’s summons dated the 18 September 2019 in which she asks for an order:

(1) That there be a Declaration that the Respondent remains bound by paragraph 2 of the Order dated 24 February 2010 (as varied) until the children reach the age of 18 or complete their tertiary education whichever is the later;

(2) That there be an upwards variation of the periodical payment as provided for at paragraph 2 of the Order dated 24 February 2010 to the CPI adjusted amount of $178,497 per month;

ii)  Secondly, the Respondent husband’s summons dated the 21 October 2019 in which he seeks an order that:

1.   Paragraph 2 of the Order dated 24 February 2010 shall be varied to the effect that:

(a)  The Respondent do continue to pay or cause to be paid to the Petitioner child maintenance for the benefit of CAM ("C"), a girl born on 28 August 1999, at the rate HK$ 5,000 per month payable on the 1st day of each month until C completes her tertiary education (first degree).

(b)  The Respondent do pay or cause to be paid to C directly maintenance at the rate of HK$ 20,000 per month, payable on the 1^st day of each month, until C completes her tertiary education (first degree) and this sum shall be applied to meet the costs of C's university accommodation and living expenses.

(c)  The Respondent do continue to pay or cause to be paid to the Petitioner child maintenance for the benefit of SLM ("S"), a girl born on 19 December 2001, at the rate of HK$ 25,000 per month, payable on the 1^st day of each month, until S completes her secondary education at S Girls in or around June 2020.

(d) Thereafter, commencing on 1 July 2020, the Respondent do continue to pay or cause to be paid:

i.  to the Petitioner, child maintenance for the benefit of S, at the rate of HK$ 5,000 per month, payable on the 1^st day of each month, until S completes her tertiary education (first degree); and

ii.  to S directly maintenance at the rate of HK$ 20,000 per month, payable on the 1^st day of each month, until S completes her tertiary education (first degree) and this sum shall be applied to meet the costs of S's university accommodation and living expenses.

2.   Paragraphs 1 and 2 of the Order dated 18th October 2013 relating to the provision of accommodation in Hong Kong shall be varied, so that in accordance with the acknowledgment made by the Respondent in the Order dated 20 August 2015, the provision of accommodation for the children in Hong Kong shall be extended until S completes her secondary education at XXxXX, Dorset, England, in or around June 2020.

iii)  Thirdly, the wife’s further summons dated the 17 February 2020, for leave to enforce arrears that are over 12 months old in the following terms:

(1) Pursuant to Section 12 of the Matrimonial Proceedings and Property Ordinance Cap. 192 the Applicant be granted leave to enforce arrears of maintenance payment, and continuing, which fell due more than 12 months prior to the date of this summons.

2.  In addition to these three applications there are three relevant court orders, which will be referred to in some detail below. These are dated the 24 February 2010, the 18 October 2013 and the 20 August 2015. Much of the dispute between the parties arises because of differences in their recollection of the original intent between them, as set out in the first court order i.e. the original ancillary relief order dated the 24 February 2010 and the way in which matters then developed over the years.

3.  At the outset I should state that I tend to agree more with the husband than the wife in terms of these areas of dispute, but nevertheless, at the end of the day, I have not come down entirely in favour of either of the parties in terms of the orders that I intend to make.

4.  To that end it is of note that according to the Form H’s, i.e. the Estimate of Costs filed by both parties in mid-April 2021, just prior to the trial, the Petitioner wife’s legal costs estimate was put at just over HK$2,325,000 and the Respondent husband’s was slightly more, at just over HK$2,750,00. As will be seen, given the amounts of money in dispute and however those disputes are characterised, this is, with respect almost a criminal waste of money, and money that would and could have been much better spent on the girls in any event.     

Brief background to the marriage

5.  By way of a brief background the parties met when they were students in the United Kingdom, they began living together in 1993 and they married a couple of years later in 1995. As will be seen they had two children, C who was born on the xx August 1999 and is now 22 years of age and S who was born on the xx December 2001 and is now 19 years of age. The girls were both born in Hong Kong, the parties having relocated to the territory in February 1993. The parties both worked initially, the wife as a buyer and then for a bank and the husband also in finance. There is no doubt that the husband was very successful in his chosen career and that the parties enjoyed a very high standard of living during the latter stages of their marriage. The wife ceased working shortly before she had C and she became a full time wife and mother thereafter.

6.  Unfortunately, unhappy differences arose between the couple and they separated in or about August 2005. The wife issued divorce proceedings based on two years’ separation and the decree nisi was pronounced on the 6 December 2007. Thankfully the parties were able to come to terms with respect to the children and they agreed joint custody with care and control to the wife and reasonable access to the husband to include alternate weekends and half of the school holidays. I am told that despite both girls now being over the age of 18 years that until relatively recently they had continued to follow the same parenting timetable and to see their father when in Hong Kong for half of their school holidays and on alternate weekends. Unfortunately, that does not appear to be the situation now. On the 24 February 2010, following the first day of an ancillary relief trial, the parties also came to terms with respect to final ancillary relief (i.e. finances). They subsequently entered into a consent order on the same date.

Background to the current dispute

7.  The current dispute is centred on this original consent order and in particular with the meaning and intent of Recital J which states as follows:

J.  AND UPON the Respondent [husband] undertaking to the Petitioner and the Court to provide a sum of money each month until S reaches the age of 18 to cover the rental of accommodation for the children whilst they are living in Hong Kong by way of 2/3 of his monthly rental allowance; in the event that such allowance ceases the Respondent shall continue to pay market rental for a comparable property to the current accommodation at Villa M, Stanley, Hong Kong; the parties may apply to vary/release the undertaking in the event of any major change in the Respondents employment package or the marital/cohabitation status (defined as 9 months) of the Petitioner. 

8.  On a straightforward reading of this clause, it seems clear that it was agreed between the parties at that time that the husband would pay for the rental for the accommodation for the girls in Hong Kong until the youngest child S, reached the age of 18 years. In the affidavits it is further explained that originally this would have meant that S would have completed her secondary schooling in Hong Kong in June 2019, with a view to her proceeding onto university or college in September or October. Thus the original date in Recital J gave the mother about 6 month’s leeway, following S completing her secondary schooling, before she and the girls needed to move out of their rental home in Hong Kong. It was also clearly understood that the wife would benefit from this given that her marital/cohabitation status was identified as a potential reason for the husband seeking to be released from this undertaking in due course. It is of note however, that this clause did not state that the rental would be paid until S reached the age of 18 years or until she ceased full time education whichever is the later which is the normal phrase used when making orders for periodical payments for children and can often be found in other related undertakings to do with children’s maintenance.

9.  It is also of note that it was further agreed that there would be a clean break between the parties, with the wife receiving half of the assets. Thus the provision of rental was in addition to the asset division. The wife did not receive any maintenance for herself, although as I have said it was clear that originally the rental was a benefit that accrued to both her and the girls, who were only 9 and 7 years old at the time and attending a well-known international school in Hong Kong.

10.  It is also of note that the wife received part of her share of the assets as a lump sum of US$1.2 million paid by equal instalments over a 10-year period. Consequently, it was ordered that:

1.  The Respondent do pay or cause to be paid to the Petitioner a lump sum payment of US$1,200,000, such sum to be paid by instalment payments of HK$77,000 per month commencing on the 1^st day of March 2010 and thereafter on the 1^st day of each month of the following 119 months.

2.  The Respondent do pay or cause to be paid to the Petitioner child maintenance for the two children of the family, C, a girl born on 28^th August 1999 and S, a girl born on 19^th December 2001 at the rate of HK$25,000 per child per month payable on the 1st day of each month commencing on 1^st March 2010 until such child is 18 years or ceases full time education whichever is the later and such maintenance is to be indexed to the Hong Kong CPI Composite index.

Part of the wife’s complaint is that the husband has not increased the girl’s maintenance in line with the Hong Kong CPI composite index. Again, on a plain reading of the order there can be no doubt that this was the original intent.

11.  At Recital D (i) the husband also undertook to pay for the girl’s education fees and associated educational expenses until they ceased their full time tertiary education. In addition, it was agreed, under recital H, that he would retain the benefit of two Zurich education policies to assist him in this.    

12.  In part then, one of the underlying issues is the extent to which these original intentions, as expressed in the undertakings and agreements reached, can be relied upon, given the way in which the case then developed.

The parties’ relationships post-divorce

13.  It seems that both parties re partnered, the wife initially with a gentleman from Perth Australia, who she was in a relationship with from about 2009 – 2015. She did not remarry but in 2014 she purchased a penthouse apartment in Perth, with a view to possibly relocating there at some point in the future. The husband for his part also met someone else, a lady called W, who he later remarried in October 2015. He has also had two further children, G, a girl who was born on the XXXX 2014 and is now 7 years of age and a little boy D, who is 4 ½ years old. The wife for her part later met someone else, also an Australian gentleman, but this time from Sydney and she has been in a relationship with him since about 2017. Unfortunately, despite her best efforts, she has been unable to see him in person since the borders closed in Australia following the Covid pandemic. She says that she does not know if that relationship can survive given the current difficulties with travel.

The variation of the order in 2013

14.  Problems between the parties continued and in 2013 the case returned to court. I will not go into the details, but suffice it to say that the main point of contention at that stage related to the rental and how much the husband should be expected to pay in accordance with Recital J. Even at that stage the husband took exception, inter alia, to the fact that the rental was a benefit that accrued to both the wife and the girls and he queried whether or not he should be obliged to pay for the wife’s share given that she was in a relationship albeit not living with her partner on a full time basis. At that point the rental was due to increase from HK$80,000 per month to HK$90,000 per month. The outcome of that hearing can be found in the Ruling (and order) dated the 18 October 2013 where I made the following decision:

Decision

18. Bearing all of this in mind I will make an order in terms of paragraphs 1, 2 and 3 of the wife’s summons dated the 3 October 2013. I am satisfied that paragraphs 1 and 2 will give effect to the original intent of the undertaking at paragraph J. On the evidence before me I accept that HK$90,000 per month represents the current market rental for the wife’s property in Stanley. In so far as the husband’s concerns with respect to the delinking of the rental payment and the wife’s status, for the avoidance of doubt this order is made on the basis that the children are still living in Hong Kong and that the mother is not cohabiting with a third party (defined as 9 months permanent cohabitation). I should also add that although there has been a major change in the husband’s employment it is clear that he continues to receive a very sizeable remuneration package.  

15.  The wife’s original summons dated the 3 October 2013 had requested the following:

1.   There be an upward variation of the periodical payment as contained in paragraph 2 of the Order dated 24 February 2010 in the amount of HK$90,000 per month being HK$45,000 per child per month with a further upwards variation as and from 1 March 2014 in the sum equivalent to the Petitioner's rental expense for her apartment at Villa M, Stanley, Hong Kong;

2.   That the periodical payment as contained in paragraph 1 of this Summons be backdated to July 2011 in the amount of HK$80,000 per month and continuing until February 2012 and thereafter a backdated payment in the amount of HK$90,000 per month and continuing until paragraph 1 herein commences; and

3.   That there be a variation of Recital J of the Order dated 24 February 2010 so that the Respondent is released from his Undertaking upon the commencement of paragraph 1 herein;

4. Costs.

16.  Consequently, an order was made in those terms. It is of note that at paragraph 7 of the Ruling I specifically stated inter alia as follows:   

7.   Counsel for the wife confirmed that the summons was framed in this way because the original order was for a clean break – which means, for the uninitiated, that it is not possible for the wife to now seek any maintenance for herself. The wife says that she is not seeking a variation of the original order, but rather an order that will give practical effect to the parties’ original agreement as set out in the undertaking at paragraph J referred to above.

17.  At that time the wife’s lawyers had been at pains to underline the fact that the wife was only asking that the original intent behind Recital J be complied with and that she was not seeking to vary the maintenance upwards per se. At the time this was fully accepted by the court. 

18.  It was also partly for this reason that I made it clear that the order was conditional i.e. that the increase in maintenance for the children was for the rental component only whilst, inter alia the children were still living in Hong Kong and the wife was not permanently cohabiting with a third party. At that time there can be no doubt at all that I had in mind the original wording of Recital J and the fact that the parties had agreed that the rental would only be paid until S reached the age of 18 years. It was not, as the wife stated in the witness box, that I made a different order because I had “something else in mind”. The order was made in those terms because maintenance for children is generally made until they reach the age of 18 years or until they cease their full time education, as indeed the original order had also stated. This has since been interpreted to mean that ALL of the maintenance should be paid until the girls complete their first degree including the rental component. Although the order was made in those terms, given the lack of any real alternative, it was specifically acknowledged at that stage that it was anticipated that the rental component would only continue whilst the children, or one of them remained in Hong Kong. There was also no suggestion, as far as I can recall at that stage, that the children would go to boarding school in the United Kingdom or that the mother might wish to relocate with them to Australia. 

19.  In the wife’s 10^th affidavit, dated the 17 February 2020, she further states that she does not agree that the 2013 order was made “to assist with the implementation of Recital J” and she also denies that she was reneging on her previous position (paragraphs 29 and 30). With respect, and for the avoidance of doubt, this is not accepted.

Other points post the 2013 order

20.  Other points to note include the fact that in 2014 the husband increased the maintenance from HK$25,000 per month per child to HK$25,400 per month per child, ostensibly because of a composite CPI uplift.

21.  Further, the husband lost his job twice, once in 2015 and again in 2018. He was out of work for a period of approximately six months on each occasion. The wife for her part did not retrain as had been originally anticipated in the court order at Recital L and she has not worked in a paid capacity since before the divorce.

The order dated the 20 August 2015

22.  The case subsequently returned to court again in 2015, but thankfully the parties were able to come to an agreement without the court’s further assistance and an order was made by consent in the following terms:

AND UPON the acknowledgment of both parties that the Respondent's liability under the Order dated 24 February 2010 to pay maintenance for the children of the family to the Petitioner until each child reaches 18 or ceases full time education whichever is the later will continue regardless of their attendance at boarding school in England;

AND UPON the acknowledgment of the Respondent that such maintenance as referred to above shall include an obligation to provide accommodation for the children of the family in Hong Kong whilst they are temporarily removed from Hong Kong for the purposes of their education at boarding school in England pursuant to paragraph 1 of the Order dated 18 October 2013;

BY CONSENT, IT IS ORDERED THAT: -

1.  The child of the family C, a girl born on 28 August 1999 be permitted to temporarily remain outside the jurisdiction of Hong Kong for educational purpose to attend boarding school at S Girls in Dorset, England, continuing until further order.

2.  The Petitioner and the Respondent forthwith be given leave to temporarily remove the child of the family S, a girl born on 19 December 2001 ("S") from the jurisdiction of Hong Kong for educational purpose to attend boarding school XXX XXX in Dorset, England from the commencement of the academic year 2015/16 and continuing until further order.

3.  There be no order as to costs of this application.

23.  It seems that the dispute between the parties at that stage had largely centred on the girl’s future education. As indicated above, the wife had wished to relocate to Perth, Australia and she had enrolled the girls into a good school there. She also wished to be with her partner. But it was difficult for the wife to relocate to Australia permanently. Both parties are British with rights of residency in Hong Kong. The wife did not have any independent right to live in Australia, either then, or indeed now. One option had been to apply for a Guardian visa. This would have meant the girls attending school in Australia as international students. I was taken to correspondence between the parties at that time where the wife had said that if the husband consented to the proposed relocation of the girls that she was willing to take up the responsibility of providing a home for them in Australia and that he would no longer be obliged to pay for the rent in Hong Kong. However, the husband would not agree to this and it was ultimately decided that the girls would go to a boarding school in the United Kingdom. C went in September 2014 and S joined her sister a year later. Understandably perhaps, the wife was then concerned, given the wording of Recital J and the original intent behind the October 2013 Ruling, that the husband may not also agree to continue to pay for the rent on the property in Hong Kong. The acknowledgements in the court order dated the 20 August 2015 make it clear that a) the husband was to continue to pay for the children’s maintenance as originally agreed (and presumably with the CPI adjustment intact) regardless of their attendance at boarding school and b) that he also would continue to pay for the rental in Hong Kong whilst the girls were studying in the UK. It is of note that there is no suggestion that his obligation to pay for the rental would continue beyond that period of time.

The situation post August 2015

24.  The girls proceeded to attend a girls boarding school in England for the latter part of their secondary school education, C for 4 years and S for 5 years. The husband estimates that he paid approximately GBP300,000 during this period, to include school fees, all Extra’s and flights back to Hong Kong 4 or 5 times per annum. There was no further CPI uplift at this time and it is the husband’s position that the wife was receiving more than she needed, given that the girls spent the majority of their time at school and that when they were back in Hong Kong they spent half of their holidays with him. It is the husband’s case that he tried to negotiate a reduction in maintenance directly with the wife but to no avail. In any event, given his periods of unemployment and the fact that he could have formally asked for an adjustment downwards but did not, he was of the view that there was an understanding that a CPI adjustment was not needed. This is not however, accepted by the wife.

The current situation

25.  C has just turned 22 years of age. After completing boarding school, she took a gap year and then began a university course at NXXXXXX TXXX UXXXX in XXXXXXXX. C has Type 1 diabetes and she also has some mental health/emotional issues. In March 2020, following the outbreak of Covid, both she and S returned to Hong Kong. She was then required to finish her first year by studying remotely. She began her second year also by studying remotely but eventually decided to withdraw from NXXXXXX TXXX. She then accepted a place at the University of New South Wales in Sydney (UNSW), and she began that course in February 2021. As I understood the evidence at trial, she has been given credit for her studies at NXXXXX TXXX and has begun year 2 at the UNSW. There was some dispute during the trial about the manner in which this was done and the fact that the husband was not properly consulted on the issue. In any event the net result arising out of both Covid and C’s own preferences, is that she is now living in Hong Kong, studying remotely and working part time. Given the current lockdown in Sydney it is not known when C may be able to begin her face to face studies in Australia and it is anticipated that she may be required to continue to engage remotely for quite some time. According to the wife’s last affidavit it is anticipated that C will complete her degree in December 2023.

26.  S also took a gap year after completely boarding school. She has a number of options open to her and she may study either at Exeter University in the United Kingdom, or at the Fashion Institute of Technology in New York or in indeed Australia. As at the date of the trial she was undecided, although Ms Rattigan confirmed on behalf of the wife, that it was thought that she was more likely to go to either Exeter Uni or New York Tech. During the intervening period she has been gaining some work experience and she has also been working part time. She is likely to complete her studies in June 2024.

27.  It is the wife’s case that she has been largely responsible for maintaining the girls since March 2020 and similarly for providing a home for them in Hong Kong. Although the girls see their father and occasionally spend time at his home, there is no doubt that they have been primarily based with their mother during this period. She continues to rent the same property in Stanley and says that this is the girl’s home and the only permanent home that they have ever known. She has not purchased a home elsewhere either for herself or for them. Although she owns the property in Perth, this is, in her words, an investment property, which provides her with a small net income. She does not own any other property. She currently has assets of approximately HK$40 million.

Open proposals

Wife’s proposals

28.  The wife’s position shifted a little from before the trial to her closing, given the fact that the rental amount had changed. However, in the final analysis, Ms Rattigan confirmed that she was seeking HK$98,000 to cover the rent and a further HK$73,531 for the girls’ general expenses or HK$171,531 per month in total, such sum to be paid until the girls completed their full time tertiary education. The difference in the maintenance requested therefore is HK$22,731 per month or just over HK$11,000 per month per child (i.e. HK$73,531 – HK$50,800 = HK$22,731 per month). In addition, she sought leave to enforce the CPI adjusted maintenance payments that were over 12 months old. The amount sought was never fully broken down, although in her 14^th affidavit she stated inter alia as follows:

10.  The arrears of maintenance as at the date of this Affidavit are HKD243,996 ($148,800-$108,134 x 6 months). I seek payment of the arrears particularly noting the children's actual expenses that I have incurred as set out below. The total CPI arrears as at the date of this Affidavit amount to HKD464,889. The total maintenance and CPI arrears stand at HKD708,885.

As will be seen these figures are not fully accepted, in part because the wife has sought to attach the CPI uplift to the rental component of the maintenance in addition to the actual maintenance for the girls.  

Husband’s proposal

29.  Prior to trial the husband confirmed that the maintenance figure of HK$25,400 per month for each daughter should remain in place until they each completed their tertiary education, but that he would divide that sum into HK$20,000 per month to be paid directly to them (under separate cover he has also confirmed that he is willing to undertake to pay such sum by standing order) and that the remainder of HK$5,000 per month would be paid to the wife as a contribution towards their other expenses. Further he said that he would pay for the girl’s accommodation costs separately and that this would not need to come out of the HK$20,000 per month as originally stated. Further he proposed paying for 2/3 of the rent until C leaves Hong Kong in order to study in Australia.

The issues

30.  The issues then are these:

i)  Should the maintenance for the girls include the rental on the property in Stanley? If so how much should the husband pay and for how long?  

ii)  How much maintenance should the husband pay for the girl’s maintenance, apart from the rental component? How should this maintenance be divided and to whom should it be paid? In considering this issue how should the Consumer Price Index uplift be regarded?

iii)  Should the wife be given leave to enforce arrears that are over 12 months old and if so how should those arrears be calculated?

The law

Variation of maintenance payments

31.  The law is straightforward and not in dispute. The husband’s application is made pursuant to section 11 (7) of the Matrimonial Proceedings and Property Ordinance Cap 192, which for the avoidance of doubt states, as set out above, that:

“(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of the matters to which the court was required to have regard when making the order to which the application relates ……”

32.  It is accepted that in considering a change of circumstances, the court should look at the case de novo. In other words, the court is not necessarily bound by the existence of a previous order. It will be necessary to look at the situation afresh and make an order based on the parties’ existing financial circumstances. See Jackson’s Matrimonial Finance and Taxation, 8^th edition Chapter 3.147 - 3.157 where it is stated that:

The modern approach is that the Court has to consider all the circumstances of the case, and the Court is not hide-bound by the existence of a previous Order; the Court must look at the case de novo and make an Order that is reasonable in the current circumstances.  The usual basis on which a variation of an Order for periodical payments is founded is that there has been a material change in the circumstances of one or both the parties.  On application for revision, the Court, as it was put in one case, has ‘regard to all the circumstances of the case’ in the same manner as if those circumstances had existed at the date of the original Order.

33.  As indicated above there would normally be a reason for the application to vary or what some might call a “trigger”. Counsel on both sides have referred me to a number of cases on variation including the Court of Appeal decision in AEM v VFM [2008] HKFLR 106. In that case the Hon Cheung JA also made the following point when setting out the law. Referring in particular to agreements reached by consent, as in this case, he said:-

8.   At the same time the basis and intended effect of the original order are relevant factors to which the Court on variation should pay regard and there should not be a radical departure from the approach taken by the parties themselves when they had entered into an agreement embodied in a consent order: Boylan v. Boylan [1988] FLR 282.

This is of particular import given the circumstances in this particular case.

Leave to enforce arrears that are other 12 month’s old     

34.  In her opening Ms Rattigan set out the law on the enforcement of arrears as follows:

Enforcement of Arrears

13.  Section 12 of the MPPO provides that the leave of the Court is required to enforce maintenance payments which were due more than 12 months before the date of. the commencement of the application for enforcement.

14.  The starting point is that arrears are not enforced if they are more than 12 months old unless there are special circumstances. The rationale for this was that if the applicant could wait a year before making an application for enforcement then there was no need for the money as he/she could manage without it and the payer may lawfully consider that he/she could disregard the liability: see Russell v. Russell [1986] 1 FLR 465.

15.  While this was the historical basis on which the rule was established, more modern case law allows for more flexibility because the payee, usually the wife, might have savings of her own that she may be able to utilize for a period of time and she may expect to seek reimbursement by a large single payment from the husband later: see CSL v. WWK (Application for Arrears after 12 months) [2006] HKFLR 518.

16.  The Court has a general discretion as to whether arrears of more than 12 months can be enforced and for what period, arrears may be enforced if there are justifiable reasons or special circumstances: see Russell v. Russell (supra); K v. K [2005] HKFLR 299; CY v. PYKC (Leave to Enforce Arrears) [2006] 3 HKFLR 500.

This analysis is uncontroversial and is accepted.

The husband’s ability to pay

Affordability

35.  The first point to note is that the husband’s position is that he can afford to pay what the wife is currently claiming. In the run up to the trial there were issues concerning his disclosure and it was in that context that the court requested that he put his position in writing. This is set out in the following Confirmation dated the 18 January 2021.

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THE RESPONDENT'S CONFIRMATION

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WHEREAS the Petitioner has filed a Summons dated 18 September 2019 seeking an upward variation of child maintenance to the amount of HK$178,497 per month

AND WHEREAS I have filed a Summons dated 21 October 2019 for variation of Paragraph 2 of the Order dated 24 February 2010 and Paragraphs 1 and 2 of the Order dated 18 October 2013

AND WHEREAS the both Summonses have been set down for trial on 20 April 2021, with 21,22, and 27 April 2021 reserved

I, ACM, the Respondent in the above cause, do hereby confirm to the Petitioner and the Court that I do not intend to dispute that I am able to afford the amount of child maintenance sought by the Petitioner in her Summons dated 18 September 2019.

36.  Thus, although the husband is not quite running a millionaire’s defence, it comes very close to that. It is of note that further issues did arise with respect to his disclosure both during and prior to the trial and that in particular there was very little clarity surrounding the financial arrangement between both himself and his new wife, W. Although noted, these issues will not be discussed further in this judgment and the court is proceeding on the premise that there is no issue with respect to his ability to pay.

Discussion

Should the maintenance for the girls include the rental on the property in Stanley? If so how much should the husband pay and for how long? 

37.  The husband has now proposed that he should pay for the rental on Villa M until C goes to Australia, in order to attend her course at the UNSW in Sydney. I agree that given the ongoing nature of the Covid pandemic that this is a reasonable outcome. Originally, under Recital J the parties had agreed that the payment of the rent would continue until about 6 months after S began her tertiary education. In the same spirit I shall order that the husband do pay the rental in the current sum of HK$98,000 per month, or such other sum as may be due to be paid as rent, until 6 months after C leaves for her tertiary studies in Sydney, Australia.

38.  The husband argues that he has been paying 2/3 of the rental on a voluntary basis given the fact that his obligation to pay ceased when S turned 18 years. This is not accepted by the wife. In any event I also made it very clear to the husband that it was not open to him to unilaterally vary any court order. (see the transcript of the hearing on the 19 November 2019). The question then becomes should the husband continue to pay for the full rental or only a portion of it? He has only paid 2/3 of the rent on Villa M since August 2020 following the girls return to Hong Kong in March of the same year.

39.  Under the terms of the 2015 order it was specifically agreed that the husband would continue to provide accommodation for the girls in Hong Kong whilst they temporarily resided in the UK to attend boarding school. When S returned to Hong Kong in March 2020 she was still technically attending school. It was then agreed that S would take a gap year. Again this seems sensible given the global pandemic. The husband has also acknowledged that C should continue to reside in Hong Kong until she can begin her face to face studies in Sydney. The wife for her part is still in Hong Kong. She is in a relationship but is not cohabiting. In such circumstances it seems to me that it is reasonable for the husband to pay for the entire rental and not simply 2/3 of it, in line with the spirit of the original Recital J and the subsequent court orders.

40.  To that end it is also of note that on the wife’s case the husband has not paid for the full rental since August 2020 and that at the time of the trial the sum of just under HK$245,000 remained outstanding. It is not known if this is the correct sum, but in any event it is further ordered that the husband do pay the outstanding sum (to be calculated as at the 1 September 2021) within the next 28 days.  

How much maintenance should the husband pay for the girl’s maintenance, apart from the rental component? How should this maintenance be divided and to whom should it be paid? In considering this issue how should the composite Consumer Price Index uplift be regarded?

The maintenance amount

41.  When considering an application to vary maintenance the court is charged with considering the matter afresh or “de novo’. At the same time, and as pointed out by the Hon Peter Cheung in paragraph 33 above, there should not be a radical departure from the approach taken by the parties themselves in their original consent order.

42.  In this instance it was originally agreed that the husband would pay for all of the “big ticket items” and that the wife would cover the girls share of the general outgoings of the home and their other direct expenses from the original maintenance of HK$25,000 per month per child. It was also anticipated at that stage that the wife would return to work and that she would pay for her own expenses either from her own income or from her other financial resources. It is also the husband’s case that it was anticipated that she would contribute towards the girl’s expenses in due course. This is not accepted by the wife. In any event and as set out above, life took a rather different turn making it arguably quite difficult for the wife to return to work.

43.  Given that I am now charged with considering the issue of maintenance de novo, it seems to me that there are probably three avenues to be explored, which may in turn offer some assistance when considering the appropriate amount of maintenance to be paid going forward. These are a) the composite consumer price index adjusted figure, b) the approximate maintenance based on the wife’s figures in her Form E dated the 17 February 2020 (and filed on the 29 July 2020) and c) the approximate maintenance based on the wife’s subsequently produced schedules of expenses. Turning to each of these in turn:

The composite consumer price index adjusted maintenance figure         

44.  The calculation provided at exhibit AM-9-6 of the wife’s 9^th affidavit dated the 17 September 2019 cannot be fully relied upon given that as from the 1 March 2014 it provides the figures based on the amount of maintenance, inclusive of the rental. For the avoidance of doubt when considering this aspect of the case I shall only apply the composite consumer price index uplift to the original maintenance figure of HK$50,000 (i.e. HK$25,000 per month per child). However, I do accept the composite CPI increases given in that exhibit (up until March 2018) and the initial calculations shown from March 2011 - until March 2013 as follows: 

M and M FCMC 11846/2007

Year	Annual CPI increase	Increased maintenance for 2 children	CPI increase	CPI increase/ annual (arrears)
1-Mar-11	5.30	50,000	2,650	31,800
1-Mar-12	4.10	52,650	2,159	25,904
1-Mar-13	4.30	54,809	2,357	28,281

45.  Thereafter the figures should read as calculated below:

Year	Annual CPI increase	Increased maintenance for 2 children	CPI increase
1-Mar-14	4.40	57,166	2,515
1-Mar-15	3.30	59,681	1,969
1-Mar-16	2.40	61,650	1,480
1-Mar-17	1.50	63,130	947
1-Mar-18	2.40	64,077	1,538

46.  I have also taken note judicial note of the composite consumer price index for 2019 at 2.9 and 2020 at 0.3. Consequently, the figures for the last couple of years should read as follows:

Year	Annual CPI increase	Increased maintenance for 2 children	CPI increase
1-Mar-19	2.9	65,615	1,903
1-Mar-20	0.30	67,518	202

47.  Thus, had the original sum of HK$50,000 per month been increased in accordance with the composite CPI index then the maintenance figure as at last year would be just over HK$67,500 per month (i.e. HK$67,518 + HK$202 = HK$67,720) in total or an increase of approximately HK$17,500 per month or HK$8,750 per month per child (i.e. a total figure of HK$33,750 per month per child). 

Maintenance based on the wife’s updated Form E of the 17 February 2020 

48.  In the wife’s updated Form E, which is dated the 17 February 2020 but filed on the 29 July 2020 i.e. about four months after the girls had returned to Hong Kong, she says that she has general expenses (less the rent) of just over HK$21,000 per month. These expenses are very reasonable and include the cost of a domestic helper. I accept that HK$14,000 of these expenses should be attributable to the girls. In addition, she says that she has the following direct expenses for them:

Children

Item	Amount
School fees
Extra tuition fees	1,593
School books and stationery	1,704
Transport to school (including school bus)	414
Medical I Dental	1,166
Extra Curricular Activities	1,110
Entertainment I presents	2,800
Holidays	10,259
Clothing I Shoes	4,140
Insurance premia	189
Lunches and pocket money	8,020
Other Transport	4,584
Child-minding fees
Uniform
Others (specify) Telephone top up (209), Girl's own food and eating out (782), travel costs to see the children in the UK (20,052), grooming/cosmetics (1,404), passport/license/visa/household expenses (472), Charlotte's supplementary credit card (3,294)	26,213
Total monthly expenses for children	HK$62,192

49.  Of these, I intend to take out the provision for holidays and entertainment/ presents. In so far as the holidays are concerned, I do not accept that at aged 19 and 22 years of age respectively, that it is appropriate to expect the husband to continue to fund luxury holidays for the girls, when they are with the mother, as he has in the past. It seems to me that both parties should fund any such holidays themselves or that in the more likely event that the girls wish to travel by themselves or with friends that this is something that they fund out of their own income or from the maintenance provided to them by the husband directly. Further it seems to me that going forward both parties should be responsible for their own entertainment costs and for the purchase of their own presents for the girls. In addition, I have some difficulty with some of the other categories of expenditure which I have marked with an *. However, putting that to one side for the moment, and as an indication only, if one simply limits the reduction to holidays and entertainment and presents   then the total costs for the girl’s direct expenses should not exceed HK$50,000 per month as set out below:

 Children

Item	Amount
School fees	N/A
Extra tuition fees	1,593 *
School books and stationery	1,704 *
Transport to school (including school bus)	414 *
Medical I Dental	1,166
Extra Curricular Activities	1,110 *
Entertainment I presents	N/A
Holidays	N/A
Clothing I Shoes	4,140
Insurance premia	189
Lunches and pocket money	8,020
Other Transport	4,584
Child-minding fees
Uniform
Others (specify) Telephone top up (209), Girl's own food and eating out (782), travel costs to see the children in the UK (20,052), grooming/cosmetics (1,404), passport/license/visa/household expenses (472), Charlotte's supplementary credit card (3,294)	26,213
Total monthly expenses for children	HK$49,133

50.  If one adds the general expense to this sum one comes to a figure that is slightly less that the increase suggested by the composite consumer price index rise (i.e. HK$14,000 + HK$49,133 = HK$63,133).

Maintenance based on the wife’s own schedules of expenses         

51.  In the alternative, the wife has produced extensive schedules setting out her actual expenses from January 2018 (which is while both girls were still at boarding school) to January 2021 (which is 9 months after they returned to Hong Kong) setting out their expenses and how these have been calculated. On occasion this made for quite difficult reading as it soon became clear that the girls, C in particular, (and putting this as neutrally as possible) has had some difficulty in budgeting appropriately.

52.  I am though particularly interested in the figures produced by the wife for the period from April 2020 following the girls return to Hong Kong. On the wife’s calculation she has spent the following amounts for and on behalf of the girls, aside from the rental and allowing for a contribution towards their share of the household expenses rounded up or down as follows:

April 2020	147,260
May 2020	44,629
June 2010	45,117
July 2020	61,196
August 2020	61,096
September 2020	118,239
October 2020	54,144
November 2020	50,500
December 2020	78,016
January 2021	61,160
TOTAL	721, 357 – or say HK$720,000

53.  Of these figures it is of note that there is a particularly high total in April 2020, which allowed for the girls return flights and other travel expenses to Hong Kong in March 2020 in the sum of approximately HK$112,000. In addition, the wife purchased an expensive watch for C’s 21^st birthday and other presents which allows for the similarly high tally in September 2020. There is also a slight increase in December, which again allows for additional Christmas spending. I accept that both parents should purchase their own gifts for the girls going forward, regardless of the approach taken in the past and that this sum should not be included as an indication of the amount of maintenance that might be appropriate going forward. Further, the high cost of flights in March is not an indication of the costs that are likely to accrue going forward. If those figures are deducted, and without there being any argument with respect to any of the other outgoings one is left with a figure of approximately HK$570,000 (i.e. HK$720,000 – (c HK$110,000 for the flights etc and HK$40,000 for the watch and other gifts) = HK$570,000. If we divide this sum by the number of months we come to the figure of HK$57,000 per month, which is less than the CPI adjusted figure or the figure based on the wife’s estimated expenses in her updated Form E.

54.  In such circumstances I have decided to allow the higher figure originally anticipated in the 2010 order – i.e. an increased amount that is in keeping with the rises indicated by the composite consumer price index. Thus the maintenance for the girls shall be increased to a total amount of HK$67,500 per month i.e. HK$33,750 per child per month, with effect from the 1 April 2020, the first month following their return to Hong Kong, account to be given for any maintenance payments made to date. Although this means that the wife will receive slightly in excess of the amount that she has spent, it will also mean that she will recoup most of the costs of the flights and other related expenses in March 2020, which I accept were necessary expenses in the circumstances, in order to ensure that the girls got back safely to Hong Kong.

How should this maintenance be divided and to whom should it be paid?

55.  I largely accept the husband’s argument that the girls should start to become more financially independent and that they must learn to manage their own expenses. However, I also accept that this can only come into effect once the girls are overseas and studying at the institution of their choice. The husband has said that he will pay for the girl’s accommodation expenses at university. I will hold him to this. Similarly, I shall accept his offer of an undertaking to pay HK$20,000 per month to each of the girls by way of a standing order each month. He is already bound by Recital D(i) in the 2010 order and is therefore obliged to pay for the university fees on top – also direct. The remaining sum – i.e. HK$13,750 per month per child shall be paid by the husband to the wife for the girl’s other indirect expenses, including the costs associated with the girl’s share of running the mother’s home whilst they remain in full time education and whether that is Villa M or in some other property. In effect this will give the mother HK$27,500 per month, which should be sufficient for that purpose, given the indications in her own schedule of expenses.    

In considering this issue how should the composite Consumer Price Index uplift be regarded?

56.  As indicated above, I have considered the composite consumer price index in coming to this decision.

Should the wife be given leave to enforce arrears that are over 12 months old and if so how should those arrears be calculated?

57.  I think the answer to this question must be no save that leave shall be given to enforce arrears with respect to the outstanding rental payments, if not paid as ordered in paragraph 40 above and in the event that they fall outside of the 12-month window. I shall not give leave otherwise. In particular, I shall not give leave for the wife to enforce any arrears of payments arising out of the CPI calculation. Further and for the avoidance of doubt the CPI uplift shall only accrue to the original maintenance figure of HK$50,000 and not to the rental payment.

58.  It seems clear that the wife chose not to push the issue of the CPI adjustment and this issue has only come to the fore because of these proceedings. I do not accept her position that it was a matter for the husband only to deal with and that she had no part to play in it. I am also conscious of the fact that the husband ended up paying significantly more for the girl’s education once they went to boarding school in England and that he also had two periods of time when he was unemployed but did not seek to adjust the maintenance downwards. He has acted honourably in this respect. In such circumstances the wife’s third application shall be dismissed in its entirety.          

Costs

59.  As I pointed out at the beginning of this judgment, the costs attributable to this litigation are very significant and out of all proportion to the issues in dispute. But at the end of the day I have not come down entirely in favour of either party. In such circumstances I shall make an order nisi to be made absolute in 28 days time that there shall be no order as to costs. For the avoidance of doubt and in the event that it becomes necessary there shall be certificate for counsel.

Summary

60.  In summary then the following orders shall be made:

i)  Paragraphs 1 and 2 of the wife’s summons dated the 18 September 2019 shall be dismissed save for an order to be made varying the original maintenance figure of HK$25,000 per month per child as set out below;

ii)  Orders with respect to the husband’s summons dated the 21 October 2019 shall be made, in part as set out below.

iii)  The wife’s summons dated the 17 February 2020 shall be dismissed.

Final order

61.  Given the difficulty with the orders made to date, further orders shall be made as follows:

Rental

i)  Order 1 as contained in the court order dated the 18 October 2013 shall be discharged;

ii)  Further it is shall be acknowledged in the pre amble of this court order that in accordance with this judgment the Respondent shall pay the rental on Villa M until 6 months following C’s physical attendance at UNSW in Sydney, in accordance with the directions given by the University and upon the reopening of the Australian borders, or upon her ceasing her full time tertiary education, whichever is the sooner;

iii)  To that end it shall be ordered that the Respondent do pay or cause to be paid to the Petitioner a sum of money equivalent to the rental of Villa M, as referred to above, as part of the maintenance ordered for the two children of the family, until 6 months following C’s physical attendance at UNSW in Sydney, in accordance with the directions given by the University and upon the reopening of the Australian borders, or upon her ceasing her full time tertiary education, whichever is the sooner;

Outstanding rental

iv)  As set out in paragraph 38 above it is further ordered and directed that the husband shall pay the full rent on Villa M with effect from August 2020 and that any outstanding sums shall be paid to the wife within the next 28 days.

Maintenance

v)  Order 2 contained in the court order dated the 24 February 2010 shall be varied to the extent that the Respondent do pay or cause to be paid to the Petitioner child maintenance for the two children of the family, XXXXXXXXXXXXXXX, (C ) a girl born on the XX August 1999 and XXXXXXXXXXXXXX, (S) a girl born on the XX December 2001, at the rate of HK$33,750 per child per month payable on the 1^st day of each month, such sum to be back dated to the 1 April 2020 and to be paid until each child physically attends full time tertiary education at the university or college of her choice as set out in this judgment whereupon the following order shall come into effect;

a) The Respondent do continue to pay or cause to be paid to the  Petitioner child maintenance for the benefit of C and S, at the rate HK$ 13,750 per month per child payable on the 1st day of each month until each child completes her tertiary education (first degree).

b)  The Respondent do pay or cause to be paid to C and S directly maintenance at the rate of HK$20,000 per month per child, payable on the 1^st day of each month, until each child completes her tertiary education (first degree) and this sum shall be applied inter alia to meet the costs of her living expenses.

c)  As set out in paragraph 29 above this order shall include the Respondent’s undertaking to pay these sums by way of standing order and to pay for the cost of the girl’s accommodation at university separately.

vi)  There shall be an order nisi to be made absolute in 28 days time that there shall be no order as to costs. There shall be certificate for counsel (if needed).

vii)  There shall be liberty to apply.