TSY v. CWT

FCMC 12343/2018

[2022] HKFC 38

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 12343 OF 2018

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J U D G M E N T

( Variation of interim maintenance/Maintenance pending suit)

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Introduction

1.  This is the application of the respondent (“Husband”) by way of Summons filed on 23 December 2020 for downward variation of interim maintenance/ Maintenance pending suit (“MPS”) (“Variation Summons”).  Since July 2019, the Husband has been paying HK$73,000 per month to the petitioner (“Wife”) comprising HK$64,000 per month as interim maintenance/MPS for their 7 year-old child and the Wife as well as HK$9,000 per month as legal costs provision.

2.  The parties got married in June 2013.  The Husband is now 43 years old and the Wife is now 41 years old. 

3.  The Wife filed a petition for divorce on 27 September 2018. Decree Nisi was granted on 1 March 2019.

4.  At the hearing on 8 July 2019, with the assistance of both parties’ legal representatives, they reached an agreement and pursuant to the minutes signed, the Court made an order (“Consent Order”) as follows:

a.  HK$64,000 be paid to the Wife monthly:

i.  HK$19,000 on or before 16^th day of each month commencing from 19 July 2019 (representing the monthly rent);

ii.  HK$45,000 on or before 1^st day of each month commencing from 1 August 2019; and

b.  HK$9,000 be paid to the Wife monthly to be passed onto her solicitors, Messrs. Pang, Wan & Choi as legal fee contribution.

Husband’s Reason for Variation

5.  In brief, the Husband’s case is that there has been a material change in circumstances and therefore the Court is entitled to look at the circumstances afresh.  In particular, he pointed to the following matters:

i.  His salary was reduced as the economy of Hong Kong had worsened due to COVID and this, combined with other additional factors, constituted a material and significant change of circumstances;

ii.  His personal expenses had increased due to his recent medical conditions (diagnosed after the last call over hearing back in March 2021) and loan repayments; and

iii.  The child’s and the Wife’s expenses are excessive.

Wife’s Opposition

6.  The Wife’s position is that the Husband has not made out a case for variation, especially as the original MPS application was disposed of by way of the Consent Order through the assistance of their legal representatives before Deputy Judge A. Tse (as she then was) during the substantive hearing on 8 July 2019 (which lasted for over 2 hours). The Wife points to the following reasons:

i. the Husband’s income did not deteriorate as he claimed. Instead, it was revealed after an order of financial disclosure of this Court that his income increased by at least 38% (not including bonus and double pay) when compared to his salary when the MPS amount was agreed;

ii. his most recent claimed personal expenses were inflated and/or he still lived a luxurious lifestyle contradicting any claims of a material change in circumstances;

iii. He committed many material non-disclosures in his various questionnaires/correspondences, failing to disclose his financial assets and income fully and frankly; and

iv. He simply had second thoughts about the Consent Order which he knowingly agreed to of his own volition and is now seeking to re-litigate the Consent Order.

Applicable Legal Principles

7.  The power to vary under section 11(1) of the Matrimonial Proceedings and Property Ordinance (Cap. 192) (“MPPO”) applies to, inter alia, interim maintenance/MPS under sections 3 and 5.

8.  In exercising the powers conferred under section 11, 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. (see section 11(7) of the MPPO)

9.  The usual basis for a variation is where there has been a material change in circumstances. The court is not required to proceed from the starting point of the original order but look at the matter afresh: AEM v VFM (No. 2) [2013] 2 HKLRD 144 at §10.  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: AEM v VFM [2008] 3 HKLRD 36, §14.

10.  Further, in HCTT v TYYC (Variation of Consent Order), [2008] HKFLR 286, at page 286, §3, Tang VP (as he then was) said:

“1. There was no change of circumstances since the consent order.

2. Although the parties, when marking the consent order had not been legally represented, this was not a complicated agreement and undue weight was given by the deputy district judge in that regard.

3. Although a judge’s discretion is wide in family cases, she could not ignore the consent order. Fairness and common sense requires that weight be given to consent orders.

Also per Lam J(as he then was):

4. Courts in the Family jurisdiction must be equally astute to guard against unmeritorious applications for variation by litigants who have second thoughts about settlements they have knowingly reached of their own volition.

….

47. I think the following approach suggested by Stock JA at para. 42 of L v C [2007] 3 HKLRD 819 at p.481, with slight modifications, can equally serve as a good guidance for deciding whether an application for variation of periodical payments in a consent order should be entertained,

“an agreement [on periodic payments] is ‘presumptively [not to be varied without material change of circumstances]’, the burden being on the party seeking to achieve different [terms] to show good and substantial cause why the company should not be respected, and … the scope for so doing is one directed at an injustice in the circumstances in which the agreement came to be concluded or in clear injustice occasioned to one of the parties by reason of event unforeseen at the time of the agreement were the agreement to be enforced to its letter.”

…”   (Emphasis added)

11.  It is trite that MPS is usually dealt with on a ‘broad brush’ basis as there is opportunity to achieve fairness if there had been an over-payment, by means of a set off.

12.  Nonetheless, Ms Leung for the Husband submitted that where there is a risk of injustice arising from irrecoverable MPS, it was held in YS v TTWD (Maintenance Pending Suit) [2011] HKFLR 439 that the Court should adopt an “extra cautious” rather than broad brush approach. That case concerned a forum dispute where there may be no possibility to make a set off should the case successfully move out of the jurisdiction. It was held that the Court must be “extra cautious to avoid the risk of injustice arising from irrecoverable MPS.” (see §§12-13).

13.  Ms Leung for the Husband also submitted that the risk of irrecoverable MPS is equally present in a case where term maintenance may well be ordered and there would no capital assets in the matrimonial pot by which any meaningful ‘set off’ can be made to redress over-payment of MPS if the Wife were to lose in the preliminary issue concerning the beneficial ownership of the Amalfi Property (“Preliminary Issue”).

14.  The Preliminary Issue has been set down for trial in July 2022 with a Pre-trial review in May 2022.

Broad Brushed Approach v Cautious Approach

15.  I would first deal with the legal point raised by Ms Leung that in the present case, whether the Court should adopt a cautious approach instead of broad-brush approach when considering the child’s and the Wife’s interim maintenance/MPS.

16.  In my view, YS v TTWD (Maintenance Pending Suit) relied on by Ms Leung is only applicable in the case when the forum is in dispute or where there was a MPS application at the same time as a jurisdictional challenge.  It is not applicable generally.

17.  Apart from the Preliminary Issue, it is also noteworthy that the Wife never accepted the Husband’s explanations for transferring a total of more than HK$4 million to his mother and his ex-girlfriends (i.e. repayment of a 26-year loan, gifts, interest free loan but without any repayments, etc).

18.  Therefore, even if the Wife do lose on the Preliminary Issue, it is still possible for the Court to consider adding back the said HK$4 million into the matrimonial pot after the trial of ancillary relief.  Further, I agree with Mr Kung’s submission that among the HK$64,000 monthly interim maintenance payable to the Wife, less than HK$20,000 is MPS payable to her and more than HK$44,000 are spent on the child.  So, unless the Husband intends to ask the child to pay back the over-payment, the Husband’s arguments to depart from a broad-brushed approach must be rejected.

What weight should be attached to the Consent Order?

19.  Mr Kung for the Wife drew my attention to the Recital of the Consent Order wherein the carefully negotiated details of new deposits for the new rental apartment, the subsidy of moving to the new rental and the return of rental deposit to the Husband were set forth by the parties’ respective legal representatives.

20.  The entire order itself was carefully drafted by the Husband’s legal representatives after a long negotiation between the parties and their lawyers including Counsel.

21.  Further, according to the Wife’s previous submission, the Husband had actually fully accepted the Wife’s last open offer which was only HK$600 less than the Consent Order.

22.  Therefore, I consider that the Husband had more than enough time before and during the negotiations to consider his financial situation and the Wife’s and the child’s proposed expenses before agreeing and signing the relevant minutes.

23.  In my view, this Court shall attach significant and great weight to the Consent Order and there should not be a radical departure from the approach taken by the parties themselves as it was reached with legal advice and full consideration of the circumstances back in 2019 and they agreed to it with full knowledge and understanding and of their own free will.

Is there a material change of circumstances necessitating a variation on a short-term basis?

24.  Originally, the Husband alleged that his income has decreased from when the Consent Order was agreed because he had not received any double pay/bonus/incentive pay during fiscal year 2020/2021.  Subsequently, it was discovered the following:

 i.  He received a double pay 5 days after he filed his Variation Summons.

 ii.  He received a deferred bonus on 26 March 2021, 2 weeks before he issued a letter to the Wife claiming he had not received any incentive pay.  He explained that deferred bonus was simply part of the bonus package from previous years.  He never disclosed in his Form E nor in his previous affirmation that he had such bonus, and when asked, he simply said it did not exist at that time.

 iii.  He had the following incomes (including all discretionary pay) over the past few years:

a.  April 2018 ~ March 2019 – HK$2,154,166.67 

Basic Salary - HK$116,400;

Total incentive pay: HK$748,666.67

Total Monthly Average: HK$179,513.89

b.  April 2019~ March 2020 – HK$2,008,825.48

Average Basic Salary – HK$125,500 (increased twice during the fiscal year);

Total incentive pay: HK$412,666.67

Total Monthly Average: HK$167,402.12

c.  April 2020 ~ March 2021 – HK$2,138.433.41

Average Basic Salary: HK$150,583.33 (increased once during the fiscal year)

Total incentive pay: HK$331,493.41

Total Monthly Average: HK$178,202.78

25.  In my view, this aspect of the alleged change in circumstances related to the Husband’s salary is simply not factually supported.  Ms Leung for the Husband also frankly admitted this point but still insisted that the Husband is running a deficit.

26.  Besides, it is very suspicious as to why the Husband had withdrawn a total of HK$244,200 (average of HK$61,050 per month) from his bank accounts in the first 4 months of 2021 despite of his vague explanation of spending the same on his business entertainment.

27.  Mr Kung for the Wife submitted that the tax loan and the borrowings from/transfers back to the Husband’s mother and his best friend, Ian, were simply a ploy to increase the Husband’s liability, which should be addressed and explored further in the AR trial instead of in the Variation Summons.  I agree.  In any event, I accept that the tax loan should be fully repaid by the Husband in December 2021, his monthly disposal income will increase by HK$42,017.

28.  At the time of the Consent Order, the Husband was only making a base salary of HK$125,000 and despite COVID in 2021, he got a salary raise, promoted and replaced his former supervisor as managing director and head of Hong Kong Retail Distribution and at least one double pay along with yearly bonus, which brought his average monthly salary up to HK$178,202.78.

29.  On one hand, Ms Leung for the Husband presently in her submission only asked for a small downward variation of HK$9,000 per month.  On the other hand, the Husband is having luxurious lifestyle and spending quite a lot of money on trendy clothing and gambling.  He claimed in his Affirmation in Reply that:

“..this means that I have a different version of myself depending on who I am socializing with. This extends not just to clothing, but also hobbies (poker, mahjong, and cigars) that I share with clients……”

30.  Ms Leung in her submission attempted to justify that losing of HK$50,000 on a poker game a night by the Husband was acceptable as client relations.  With respect, I entirely disagree.

31.  In short, I am not satisfied that there is a material change of circumstances necessitating a variation.

Recent Medical Diagnosis

32.  The Husband is claiming in his Affirmation in Reply for the first time that his recent medical diagnosis of Depressive Disorder by a psychiatrist.  In my view, the medical expenses he documented is insufficient to constitute a material change in circumstances.  More importantly, he admitted that most of his medical expenses were reimbursed by his employer’s medical insurance.  His argument that his condition affects his earning capacity is even more irrelevant in view of his recent promotion to the rank of managing director of a public financial company.  In any event, there is no or insufficient evidence that his medical condition causes him to lose or reduce his capacity to work.

Allegations against the Wife of undisclosed income

33.  Mr Kung for the Wife submitted that one of the unsupported allegations made by the Husband in his Affirmation in Reply, which the Wife did not have any chance to reply under oath, was that she had huge undisclosed assets.  In my view, the Husband cannot use the opportunity of filing his Affirmation in Reply to make new allegations against the Wife as it would be obviously unfair to her.

34.  In any event, I consider that the undisclosed income alleged by the Husband are not significant as the greatest sum of the alleged income of the Wife as set out in the table in Ms Leung’s submission is only about $470.

Whether the Wife’s and child’s expenses should be significantly reduced

35.  The Husband further complained the excessive and unreasonable expenses incurred by the Wife and the child.  I consider that it is simply an attempt to re-litigate the Wife’s MPS application of 2019 as warned against by Lam J (as he then was) in HCTT v TYYC. In rehashing the same arguments, the Husband is simply having second thoughts about settlements he agreed to of his own volition and is trying to undo the Consent Order through the back door.  His complaint must be rejected.

36.  In any event, by adopting a “broad-brush” approach instead of detailed investigation, I accept the expenses claimed are not excessive and unreasonable as set out in the Wife’s 3^rd affirmation.

LitigationFunding

37.  In the Variation Summons, the Husband just asked for downward variation of the interim maintenance/MPS from HK$64,000 to HK$47,000 but never prayed for a variation of legal fee provision.  However, through his Affirmation in Reply, he suddenly “slipped” in many new matters which he had not raised in his Supporting Affirmation, of which variation of legal fee provision is one.  It is again very unfair to the Wife who did not have the chance to reply.

38.  The Husband in fact made on open proposal to remove the current legal fee provision.  I consider that it is simply another the attempt of him to re-litigate the issue of legal fee provision, which had been agreed by the parties earlier.  In any event, as he has failed to make a formal application to amend the Variation Summons, I refuse to consider his request for variation or removal of legal fee provision.

Conclusion

39.  To sum up, I am of the view that the Husband has not made out a case for any variation of the Consent Order on any basis.  The Variation Summons be dismissed.

40.  I see no reason to depart from the general rule that costs shall follow event.  I now make an order nisi the Husband to pay costs with certificate for counsel to the Wife, which becomes absolute unless any party applies to vary by summons with supporting affirmation within 14 days.  Such costs shall be summarily assessed on paper without oral hearing, if not agreed by the parties, with the following directions:

1.  The Wife do lodge and serve her statement of costs (not more than 2 pages, font size 14 and double line spacing) within 7 days;

2.  The Husband do lodge and serve his statement of objection (not more than 3 pages, font size 14 and double line spacing) within 7 days thereafter.