S,WCK v. F, P

FCMC 11192/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO 11192 OF 2012

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R U L I N G
(Construction and variation of court order)

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1.  This application is concerned with the construction and possible variation of a court order dated 28 August 2013, entered into by consent following a successful FDR hearing, in which, inter alia, it was agreed that:

G.  AND UPON the Petitioner and the Respondent acknowledging and agreeing that the provision for J [the child of the family] made under the Fund is intended to cover his maintenance, with liberty to apply in the event to deficit.

K.  AND UPON the parties agreeing that pending the sale of the Former Matrimonial Home (as defined hereunder), each party shall continue to make the payments that they do in respect of the living costs at the Former Matrimonial Home as set out in the parties’ respective Form Es.

BY CONSENT, IT IS ORDERED THAT:

1. Save as provided in Paragraph 2 below, each party shall retain his or her own real and other properties.

2. Flat CM, (“the Former Matrimonial Home”) shall be marketed forthwith for sale initially at HK$80 million or such other sum as may be agreed between the parties, to be sold within 6 months, with liberty to apply reserved.  The costs of the sale shall be paid out from the proceeds and an independent Hong Kong solicitor to act on behalf of the parties as Vendor.

3. From the net proceeds of sale of the Former Matrimonial Home, HK$8 million be set aside and to be placed in a new bank account in the name of the Petitioner, to be used solely for the benefit of J until he finishes full-time education to the level of first undergraduate degree (“the Fund”).

4. Commencing from 1 September 2013, the costs and expenses of J as set out in the schedule attached hereto and marked “B” shall be borne by the said Fund, with liberty for the Petitioner to claim reimbursements in respect of payments made for the benefit of J prior to the Fund being set up but after 1 September 2013.

5. Upon J completing full-time education to the level of first undergraduate degree, any surplus from the Fund belong to J absolutely, and there be liberty to apply in the event of any deficit.

6. After the Fund has been set up and all costs and expenses of sale have been provided for, the net proceeds of sale of the Former Matrimonial Home be paid out to the Petitioner as to 53.25% and the Respondent as to 46.75%.

7. Upon full compliance of Paragraph 6 above, both the Petitioner’s and the Respondent’s claims for all forms of ancillary relief against each other or each other’s estate in Hong Kong or elsewhere in the world, including claims for maintenance pending suit, periodical payments, secured periodical payments, property adjustment and lump sum orders under the Matrimonial Proceedings and Property Ordinance (Cap. 192) and/or other relevant legislation be dismissed, and further an order is made under section 17 of the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481) that neither party shall on the death of the other be entitled to apply for any order under that Ordinance.

8. Liberty apply the implementations of this order.

9. There be no order as to costs, including all costs reserved.

2.  The difficulty that has arisen since the order was made is that it has not proved possible to sell the former matrimonial home as had been originally envisaged.  In part this is because the outside of the property is presently being renovated which arguably makes it a less attractive option for a potential purchaser at the present time. Further it is a large flat with high ceilings and is generally less sought after than other properties in the same price bracket. I am told that offers to date have been well below the original asking price of HK$80 million.

3.  On the 5 September 2014 the respondent husband filed the following summons. He is currently unrepresented.

A) PETITIONER MUST PAY 50% CM RENOVATION DUE 30/9/14

B) PETITIONER MUST SHARE MONTHLY EXPENSE UNTIL SALE of FLAT

C) PETITIONER MUST REIMBURSE RESPONDENT for EXPENSE PAID for J’S MAINTENCE SINCE 1/9/13

D) PETITIONER MUST COUNTER SIGN LOAN APPLICATION WITH HSBC USING FLAT AS COLLATORAL

4.  In so far as item 1 is concerned that has now been resolved and both parties have contributed to the renovation costs. As indicated previously the court has no jurisdiction to compel a litigant to counter sign a loan application on a jointly owned property and thus item 4 also falls away. That leaves items B and C to determine.

Must the Petitioner share the monthly expenses until the sale of the flat?

5.  This application centres on the proper construction of clause K and order 2 as contained in the court order dated the 28 August 2013 as set out above. The husband argues that order 2 is absolute – i.e. that the property is to be sold within 6 months and that his obligations under clause K only continue therefore for a six month period i.e. until the 28 February 2014. Otherwise he argues, if the property is not sold then the alternative would mean that he might be obliged to pay the household expenses ad infinitum. He maintains that that was not the original intention of the order. In the meantime it appears that the husband is not paying the household expenses as was originally intended. It is also of note that he has not made any application under the “liberty to apply” provision that was expressly retained in order 2.  In other words if the property did not sell within the 6 month period then this provision allowed either party to make an application to the court for further directions in relation to the proposed sale.

6.  The wife for her part takes issue with the husband’s stance on the household expenses. She also points out that the husband’s case is not consistent.  

7.  It seems to me that, on a correct reading of these two clauses that the original intent was that each party should continue to be responsible for the costs that they had been responsible for, in the matrimonial home as at the 28 August 2013. These expenses were set out in the parties respective Form E’s. In the event that the property did not sell as expected then the correct course of action would be to return to court in order to expedite the sale. In the event that the parties did not make that application and the property remained unsold then it seems to me that they remain bound by clause K. 

The Form E’s

8.  According to the husband’s Form E dated the 5 October 2012 he had the following expenses:

Part 4   Current Monthly Expenses 4.1    General
Item	Amount
Rent	HK$0
Mortgage instalments	HK$0
Utilities (electricity, gas, rates, telephone & water)	HK$12,000
Management fees	HK$5,200
Food	HK$10,000
Household expenses	HK$3,000
Car expenses	HK$10,500
Insurance premia	HK$800
Domestic helper(s)	HK$11,000
Other (specify)	HK$8,000
Total monthly household expenses Attach copies of the latest rental receipt.	HK$60,500

4.2    Personal
Item	Amount
Meals out of home	HK$10,000
Transport	HK$500
Clothing / Shoes	HK$2,500
Personal grooming (including haircut and cosmetics)	HK$1,000
Entertainment / presents	HK$10,000
Holidays	HK$20,000
Medical / Dental	HK$4,800
Tax	HK$0
Insurance premia	HK$5,500
Interim maintenance
Contribution to parents
Dependent family members
Other (specify)
Total monthly personal expenses	HK$54,300

4.3    Children
Item	Amount
School fees	HK$15,500
Extra tuition fees	HK$1,000
School books and stationery	HK$0
Transport to school (including school bus )	HK$0
Medical / Dental	HK$0
Extra Curricular Activities	HK$1,000
Entertainment / presents	HK$1,000
Holidays	HK$5,000
Clothing / Shoes	HK$0
Insurance premia	HK$1,900
Lunches and pocket money	HK$0
Other Transport	HK$0
Child-minding fees	HK$0
Uniform	HK$0
Others (specify)	HK$0
Total monthly personal expenses for children	HK$
Total Monthly Expenses (4.1 + 4.2 + 4.3)	HK$140,200

9.  Likewise according to the wife’s Form E dated the 3 October 2012 she had the following expenses:

Part 4   Current Monthly Expenses 4.1    General
Item	Amount (HKD)
Rent	--
Mortgage instalments	--
Utilities (electricity:$3000/month; Gas: HK$1000/month; Rates: 10,000 quarterly; Water: $1200/month; Telephone: $300/month)	Presently paid by Respondent (on average $8,000 per month)
Management fees ($15,660 quarterly)	Present paid by Respondent (on average $5,220 per month)
Park ‘N shop	Presently paid by Respondent (on average $7,600 per month)
Others (including wet market and household expenses)	$10,000
Car expenses	Cleaning - $300
Insurance premia	Present paid by Respondent
Domestic helper(s)	$9160
Other (specify) – Maintenance & repair/ purchase	$10,000
Total monthly household expenses	Average HK$29,460 (excluding those presently paid by Respondent

4.2    Personal
Item	Amount
Meals out of home	$8,500
Transport	$1,000
Clothing / Shoes		$7,000
Personal grooming (including haircut and cosmetics)

Entertainment / presents

Gym Gifts

$3,000 $2,000

Holidays	--
Medical / Dental	$1,000
Tax	$2,600
Insurance premia	$4,000
Interim maintenance	N/A
Contribution to parents	N/A
Dependent family members    phone	$900
Other (specify)
Total monthly personal expenses	HK$30,000 N.B. holiday not included

4.3    Children
Item	Amount (HKD)
School fees ($163,000 per year)	Presently paid by Respondent (on average $13583.33 per month)
Extra tuition fees	$15,000
School books and stationery	$500
Transport to school (including school bus ) (School bus $10,300 per year round trip from Conduit Road)	Driver & car presently paid by Respondent;
Medical / Dental Nov 11-Dec 12 billings $67,661.08 not reimbursed yet	$1,500
Extra Curricular Activities	--
Entertainment / presents	$1,500
Holidays	$6,500
Clothing / Shoes	$1,500
Insurance premia (USD$2965 per year)	Paid by Respondent (on average – US$247 per month)
Lunches and pocket money	$2,500
Other Transport	N/A
Child-minding fees	N/A
Uniform	N/A
Others (specify)       Summer camp 10276.55   School Interim 10700	$2,000
Total monthly personal expenses for children	HK$31,000 (excluding school fees, transport to school and insurance)

Total Monthly Expenses (4.1 + 4.2 + 4.3)

HK$90,460

These are the figures that are referred to in clause K.

10.  For the purposes of this application each party’s personal expenses are largely irrelevant. It also seems to have been accepted, as set out above, that the husband was paying the lion share of the general or household expenses in the sum of HK$60,500 per month and the wife was paying an additional HK$29,460 per month. In round figures then the living costs at the former matrimonial home were split on a 1/3 : 2/3 basis.

11.  The difficulty that arises is that as time has moved on the situation has changed. This is in part due to the fact that the husband claims to be short of money which he says is a direct result of not being able to sell the property. Putting that to one side for the moment the fact remains for example that the driver is no longer employed and that the husband has cancelled the ParkNshop card. Other payments have been varied – although this does not appear to have been by agreement between the parties. I am told that both parties continue to reside in the former matrimonial home with J – although there is no communication between them. The husband also spends approximately half of the month in Bangkok. The wife says that she now pays more because the husband has failed to comply with clause K.  The husband says that it was always the intention that the wife would be responsible for J’s expenses going forward – which is why there is a fund against which she can claim in any event. I accept that up to a point. It was though never anticipated that the parties would still be living under the same roof at the former matrimonial home with all of the attendant expenses that that implies.  

12.  In such circumstances it seems to me that there will need to be a proper accounting exercise and that each party shall file an affidavit in which they each set out the general expenses paid by them since the court order of the 28 August 2013 – i.e. from the 1 September 2013. The list of expenses shall be in the same format as the Form E – General. Documentary evidence of payment shall be attached as appropriate. As an indication I will expect the husband to pay 2/3 of those General expenses and the wife 1/3 until the sale of the former matrimonial home. This is in line with the original intention behind clause K.  For the avoidance of doubt the husband must share the monthly expenses on the flat in that ratio until the flat is sold. I do not accept that the original intention of the order was that the husband should only contribute towards those expenses until the 28 February 2014. There shall be no reimbursement by one party to the other pending the outcome of the accounting exercise.

Should the Petitioner reimburse the Respondent for expenses paid by him for the son’s (J’s) expenses since the 1 September 2013?

13.  The rationale for this request seems to be that because the order allows for a fund to meet the costs and expenses for J that it follows that the husband should be reimbursed from this fund in the same way as it was anticipated that the wife should be given that the parties are still living under the same roof and each is contributing to J’s general expenses. At annex B attached to the order the fund for J was estimated as follows:

Fund for J (figures are estimates only)
Item	Notes
From 2013 to 2016 (Grade 10 to 12)
School Fees at HK$300,000 per year	Based on HKIS website and subject to increase by the school
Tutoring Fees at HK$180,000 per year	Based on Form E
Insurance at US$3,000 per year
Deductibles at US$1,200 per year	Covers dental / orthodontist
Household expenses, expenses for domestic helper, utilities and home maintenance at HK$120,000 per year	Based on Form E
Holidays at HK$102,000 per year	Including comps at USC and ID Tech (US$4,000) or M mandarin camp (US$6,000), subject to plan and what works to help college admission
Pocket Money at HK$72,000 per year	Includes school lunch, snacks, clothes, games, and books
From 2016 to 2021 undergraduate degree
Year 1 tuition fee	Based on the websites of the University of C.  Projected yearly tuition increase of $3,000 USD.
Year 2 tuition fee
Year 3 tuition fee
Year 4 tuition fee
Other living expenses @HK$300,000 per year	Includes food, accommodation, holidays, pocket money, medical and dental insurance)

In the event that there was a surplus then it was agreed that those funds would belong to J absolutely – if there was a deficit then it was agreed that there would be liberty to apply and that the matter would return to court.

14.  The wife says that given the fact that the former matrimonial home has not sold, she has been shouldering most of J’s expenses on her own. For example she has been paying for J’s school fees and other related costs.  I accept that this must have been a considerable burden for her – notwithstanding the fact that she will be able to claim against the fund for some of these expenses in due course.

15.  The real difficulty lies in relation to the reference in the schedule to household expenses, expenses for the domestic helper, utilities and home maintenance at HK$120,000 per annum – this being the share attributed by the parties to J’s general household expenses. This amounts to HK$10,000 per month. It was anticipated that J would be living with the wife after the sale of the matrimonial home and that this would be J’s notional share of her general expenses. In addition it is clear from order 4 that it was also intended that the wife should be able to claim against the fund for reimbursement for J with effect from the 1 September 2013. Consequently the husband argues that the wife should be responsible for all J’s expenses and that he should be reimbursed for J’s share of household expenses that he has continued to be responsible for by either the wife and/or from the fund. He argues that given that he has been contributing towards the general household expenses that this is only fair and reasonable. He has also tried to calculate what he says J’s actual share of those expenses should be. Unfortunately these are not in the same categories as the Form E and thus it is very difficult if not impossible to compare the two accurately. In such circumstances it seems to me that the most straight forward way to proceed is that on the premise that the parties should continue to contribute towards the general expenses of the household on a 1/3 (wife) : 2/3 (husband) ratio which shall include a contribution towards J’s general household expenses, it is further directed that once the fund is established each party may claim HK$5,000 per month from the fund for the period from 1 September 2013 to either September 2016 when J starts College, or when the property is sold and the parties move out – whichever is the earlier. Thus each party shall continue to contribute towards the household expenses as was originally intended and this shall include a contribution towards J’s expenses.  On that basis they shall be able to equally claim against the fund for a portion of J’s share of the household expenses whilst J continues to reside at the former matrimonial home. 

Other points

Can the husband afford to pay this sum?  

16.  The husband pleads poverty – but on the basis of his own submissions he has spent over HK$3 million (HK$3,130,105) from September 2013 to February 2015 – i.e. HK$184,125 per month. This is a significant sum for one person. It is not clear how this level of expenditure can be sustained given that he has no income, even if the matrimonial home is eventually sold for HK$80 million. The problem it seems to me is that the husband has taken no steps at all to alter his own lifestyle so as to accommodate the present situation. Thus although I accept that he may indeed have cash flow difficulties, to an extent that is a matter of his own making and is not a reason to vary the existing order.   

Conclusion

17.  I will therefore order that:

1) Each party do file and mutually exchange an affidavit exhibiting a schedule setting out their General Expenses in Form E format as set out in paragraph 8 above from the 1 September 2013 to date, within the next 56 days i.e. on or before the 15 May 2015.

2) Order 4 of the court order dated the 28 August 2013 shall be varied in that both parties may claim reimbursement from the fund in relation to the reference to household expenses in schedule B in the sum of HK$5,000 per month each for the period from the 1 September 2013 until either the former matrimonial home is sold or J begins College in September 2016, whichever is the earlier. 

3) There shall be a call over in relation to this matter on the 16 June 2015 at 9:30 a.m.       

4) Both parties are to personally attend that hearing.

5) Costs be reserved.

18.  In the event that either party wishes to seek further directions in relation to the sale of the former matrimonial home, then it is further directed that the appropriate summons and supporting affidavit be filed returnable on the 16 June 2015 in the first instance.