RWMY v. AH

FCMC 5635/2008

[2019] HKFC 119

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 5635 OF 2008

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JUDGMENT

(Variation of children maintenance &

reimbursement of children expenses)

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Introduction

1.  In this judgment, I will refer the petitioner as the “wife” and the respondent as the “husband”, notwithstanding the fact that their marriage had ended with the grant of decree absolute in 2009.

2.  I was not the historical docket judge of the case. It was transferred to my court in or about April 2017 at the stage of pre-trial review (PTR) of the cross applications taken out by the respective parties for variation of children maintenance under 2 consent orders. The trial was originally fixed for 3 days, but was adjourned part-heard. During the adjournment, the wife took out another summons for reimbursement of children expenses, the trial of which was heard together with the part-heard of the cross applications for variation of children maintenance.

3.  I shall say more on the adjournment of the trial and this additional summons of the wife later in this judgment. But at this stage, it is pertinent to point out that according to her counsel, Mr Giles Surman, the wife is not seeking back-dating of children maintenance by way of this additional summons for reimbursement. Her claims is for out-of-pocket children expenses paid by her which the husband has undertaken to pay but did not, including their extra tuition fees and flights.[1]

4.  Thus, in this trial, I have to determine 3 applications taken out in time sequence as follows:

(1) the husband’s application dated 22 December 2015 to vary down the children maintenance payable to the wife (then standing at $23,500 per month for the son, and $35,500 per month for the daughter) (“Husband’s Summons”);

(2) the wife’s application dated 19 May 2016 for varying up the children maintenance to the sum that the court deems fit and appropriate (“Wife’s Summons”);

(3) the wife’s application dated 2 March 2018 seeking reimbursement of children expenses from December 2015 to February 2018 in the total sum of $928,333.82. (“Reimbursement Summons”).

5.  Usually, a variation of maintenance application would be made upon a triggering event which leads to a change of circumstances. According to the husband, the major trigging event is that the children have left Hong Kong and gone to UK for study at his costs and hence spending lesser time in the wife’s household, so that the amount of maintenance payable directly to her for the benefit of the children should be adjusted to reflect this change. On the other hand, the wife proffers that the children are growing up with increasing needs, but since the husband has failed to provide sufficiently for them, she has been dipping into her own purse to support them, which justifies a substantial upward adjustment of the existing level of children maintenance payable to her. 

6.  Pausing here, it needs to be pointed out at this stage that the husband’s increase in wealth is not one of triggering events put forward by the wife for her variation application.

7.  Upon hearing all evidence and considering counsel’s submission, I am of the view that the major issues for determination boil down to:

(1) the reasonable amount and the payment structure of children maintenance way forward to be paid by the husband, including an apportionment between those payable directly to the wife and those payable directly to the children/the service provider(s), in the light that the children are growing up and are now studying in UK for most part of the year; and

(2) whether the wife should be reimbursed for the children expenses incurred by her since December 2015 (ie since the Husband’s Summons).

A brief background

8.  The wife, now aged 52, is predominately a housewife. She also works as a freelance beauty consultant (but with minimal earnings) and participates in stock investment/trading from time to time.  She is now living in a self-owned 1,600-sq-feet apartment in Jardine’s Lookout.

9.  The husband, now aged 68, is a very senior member of the legal profession. Although still in practice, he says that his professional earnings have been shrinking. For example, for the financial year ended 31 March 2015, he earned $1,594,476 only.  He is now living in his house of over 3,000 sq feet in the Pokfulam area.

10.  The parties were married in 1999. The wife presented her petition for divorce in 2008. Decree absolute was made in 2009. The marriage thus lasted for about 10 years.

11.  There are 2 children born within their wedlock, namely a son (going to turn 20 by this July) and a daughter (now aged 18).  By an order of 7 August 2008 made by HH Judge Bruno Chan (as he then was), custody of the children was granted to the parties jointly, with care and care to the wife and reasonable access, including staying access, to the husband.

12.  In so far as the ancillary relief matters are concerned, the parties entered into 2 consent summonses which were made into consent orders in 2009 and 2014 respectively. I shall go into greater details into these consent orders later in the judgment.

13.  Over the years after their divorce, both parties developed their own romances with other third parties, which I need not go into details, save that the husband started an intimate relationship with a lady who later gave birth to a daughter in 2013 (“Little Daughter”).  Soon he broke up with this lady who commenced an application in the family court under the Guardianship of Minors Ordinance for the maintenance of the Little Daughter in 2015 (“GMO Case”). The GMO case was later settled on the 1^st day of trial before me. Without going into the details of the settlement, I can only say, as revealed from the evidence of this trial, that the husband is required to pay monthly maintenance of $80,000 per month covering rental, living and education expenses for the Little Daughter until she turns 18 or completes full time education, whichever is the later.

14.  In August/September 2013, the son left Hong Kong for study in a boarding school in UK, followed by the daughter in August 2015. It is anticipated that they will continue to receive their university education overseas. It can thus fairly be said that the children broadly spend about 4 months in Hong Kong and about 8 months in UK a year.

15.  There should be little dispute that as at the trial, the husband is footing all the schools’ bills and one set of return air ticket between London and Hong Kong for each child. He is also paying them pocket money and allowing them to use his AE credit card.  The amount that he is roughly paying directly to the children and/or to the service providers during the autumn term of 2017-2018 (ie from July to September 2017 only) is about $132,807.99 for the son, and $159,711.60 for the daughter. Averaged out, he is paying about $97,506 per month for the children’s UK expenses. On top of this, he is paying monthly children maintenance directly to the wife pursuant to the 2 consent orders in the total sum of $59,000 per month. The aggregate amount he is paying for the children as at this trial is thus about $156,506 per month.

Settlement under the 2 consent orders

16.  In the hearing for financial dispute resolution (FDR) before HHJ Bruno Chan (as he then was) on 18 June 2009, the parties reached a global settlement on children and spousal financial arrangements which was made into a consent order (“2009 Consent Order”).

17.  According to the terms of the 2009 Consent Order, the husband was required to pay a lump sum of $18 million to the wife as a clean break of her claim for lump sum provision, transfer of property provisions and property adjustment provision against him.

18.  On top of that, he shall continue paying periodical maintenance to her and the children in the total sum of $101,000 per month (ie $30,000 for her; $35,500 for the benefit of each child). 

19.  In addition, the 2009 Consent Order contains the following relevant undertaking of the parties:  

(1) that the husband undertakes to continue to pay in full the school fees of the children, their summer camp (such attendance to be agreed beforehand) and the air fares to attend such summer camp (Recital D);

(2) that the wife undertakes to use her best endeavours to find suitable and comfortable accommodation to purchase for herself and the children upon receiving the 1^st lump sum instalment of $9 million from the husband; and in the event that the sale and purchase agreement is signed within 3 months of the consent order, the wife would inform the husband so that he can arrange the drawdown of the 2^nd lump sum instalment (Recital F);

(3) that the wife undertakes to continue to provide comfortable and suitable accommodation for the children until the daughter has completed her university studies (Recital G); and that in the case she decides to sell her property before the daughter completes her university studies, she shall use the sale proceeds to purchase another suitable accommodation for herself and the children (Recital H);

(4) that in the event the wife wants to mortgage her property, she undertakes not to secure a charge of more than 1/3 of its market price, without the leave of the court (Recital H).

20.  As said, the son left Hong Kong for study in UK in the summer of 2013.

21.  The parties then entered into another consent summons made into a consent order on 28 February 2014 (“2014 Consent Order”) to vary down the son’s maintenance payable to the wife, from $35,500 to $23,500 per month, plus the husband’s following undertaking to cover the son’s expenses:

(1) that he is and will continue paying for the son’s boarding school fees including tuition and boarding fees comprising daily living expenses, food, clothing, sporting equipment, extra-tuition and medical expenses; and

(2)  that he will pay for 1 return economy ticket for the son to and from London per year.

22.  To complete the picture, it is noted that there is no application for variation of spousal monthly maintenance in this trial.

The concession and the scott schedule

23.  I first came to have seizure of this case on 3 April 2017 when it was transferred to me for determination of the wife’s application to consolidate this case with the GMO Case. Her application was summarily dealt with but dismissed by me upon hearing argument from both parties and the applicant in the GMO Case. The order of dismissal expressly provides that the husband acknowledges that,

“…he is not running a case that because he has to pay the monthly child’s maintenance of the [Little Daughter], thus he has no means to pay for the monthly children’s maintenance of the children of the family [names of the children] in the trial of these proceedings (“the Variation Applications”)…”

24.  The case came before me again on 11 August 2017 for PTR. I stressed to parties again that since I was not the historical docket judge of this case, I was not familiar with the case background and had not read all the previous court documents, which were voluminous, before this PTR. I thus relied greatly on the assistance of the parties’ legal representatives in this PTR. Then, Mr Jeremy Chan, counsel for the husband, submitted that the husband did not wish to drag on the matter and would want to proceed to trial as soon as possible, as 1½ years were already passed since the Husband’s Summons was taken out. He thus conceded on his financial ability to pay the children’s maintenance by acknowledging and agreeing the following:

“…that he is not running a case that he lacks the financial means to pay any children maintenance as ordered/varied up or down by this court.”

25.  In response, Ms J Chin, solicitor appearing for the wife, submitted that if trial was to be fixed, she asked that to be in consultation with counsel’s diary. She also wished to seek discovery of how much the husband was then paying for the children’s UK expenses, which she agreed could be done by way of further affirmation from the parties.

26.  In view of the above and after some discussion with the parties, I announced in the PTR that the husband’s ability to pay is no longer a live issue to try (due to the concession made by him), and that the only outstanding issue for trial would be the reasonable needs of the children, and the apportionment of such payment (ie how much should be paid directly to the children, and how much should be paid directly to the wife for their benefit).  Further, I agreed that it was in the interest of the parties to set their summonses down for trial without further delay, and thus gave various directions leading up to trial, such as preparing a joint scott schedule setting out items by items the agreed and/or disputed children expenses (“Joint Scott Schedule”), and lodging a joint letter by 14 December 2017 to confirm that all directions have been complied with. The Husband’s Summons and Wife’s Summons was thus set down for trial for 3 days to commence from 30 January 2018. The length of the trial was arrived at upon brief discussion with the parties.

27.  It is pertinent to say that neither party indicated to me in the PTR that the above directions needed any refinement, nor has there been any appeal lodged in respect of any of the case management directions given by me in this PTR hearing.  It is also important to note that the parties, as well as their legal representatives who attended the PTR (Ms Chin for the wife and Mr Jeremy Chan of counsel for the husband), were at all material times well aware of my purpose and rationale of ordering the Joint Scott Schedule, which was to assist the parties to focus on the issue of their agreement and/or their disagreement on the reasonable amount and payment structure of children maintenance items by items.

28.  After the PTR, the parties lodged the Joint Scott Schedule duly signed by the respective solicitors with this court on 19 January 2018.[2]  On the same day, they also lodged a joint letter confirming that all directions were complied with. [3]

29.  In the Joint Scott Schedule, there is a column of the “Petitioner’s Case” which is sub-divided into the columns of “In UK” and “In HK”, which means that the wife puts the children expenses at $100,060 per month (when they are in UK) and $116,292 (when they are in Hong Kong). I was thus very surprised to hear, during the trial, from the wife’s counsel, Mr Surman, that the amount of children maintenance provided under the wife’s column in the Joint Scott Schedule did not represent the children maintenance that she sought to vary upwards, but merely representing the amount that she was then spending for the children due to insufficient financial provision from the husband.   This raised the grave, and in my view rightly made, concern of Mr Jeremy Chan of the difficulty of not knowing what was the wife’s case to meet. It turns out that her agenda is to link the upward adjustment of children maintenance with the so-called increased of wealth of the husband, which I will have more to say later in this judgment.

30.  On the other hand, I have to point out that in the Joint Scott Schedule, the husband did not state his case on the reasonable amount of children expenses in response to the wife’s figures. He merely made such general comment as “excessive” or “should be included in children maintenance”. His more substantive view on the reasonable amount of children expenses first came only in the opening submission of his counsel at the sum of $18,675 per month, ie $9,337.50 per child per month.[4]  Thus, it is my view that he is equally to be blamed for not assisting the court by presenting a meaningful and focused Joint Scott Schedule in accordance with my directions given in the PTR.

31.  I have to bluntly say that the way the parties prepared the Joint Scott Schedule has totally defeated the purpose of my case management direction stated above, leading to the undesirable result that neither party is able to know each other’s case on the reasonable expenses/costs of the children before the start of the trial, and thereby causing the most undesirable aftermath of lengthening the trial, which I shall take into account in deciding the costs order to make in this judgement.

The husband’s latest case and open offer

32.  In support of the Husband’s Summons and/or in opposition to the Wife’s Summons, the husband has filed his 5^th to 7^th affirmations. Broadly, he says that children maintenance payable “to the wife” by him under the 2 Consent Orders should be varied downwards because there are material changes of circumstances, including:

(1) Both children are now studying/staying in the boarding schools of UK, which means that the wife is running an “empty household” for most of the year and the items relating to children expenses in her household should thus be deleted;

(2) He is now paying all the boarding schools’ bills, which is already a sharp increase of the children expenses that he used to pay when they were studying in Hong Kong;

(3) His legal practice in the last 2 years is deteriorating badly due to (i) his retiring age and medical condition (of severe spinal degeneration which makes him unable to stand/walk for any length of time); (ii) public media attack by his own mother and the lady who borne him the Little Daughter in the GMO Case; and (iii) general downturn of the practice of the criminal bar. As a result, he had to place his Pokfulam house under mortgage in July 2015 for $5 million in order to pay for everyone’s upkeep;[5]

(4) He has additional and long-term financial obligation to meet in respect of the Little Daughter.

33.  As aforesaid, during the PTR hearing of 11 August 2017, the husband made concession on his ability to pay whatever the amount, whether upwards or downwards, as ordered by the court.

34.  In relation to the Reimbursement Summons, he is of the view that he has already fully complied with the payment requirement under the 2009 and 2014 Consent Orders. The so-called reimbursements sought by the wife are not covered by the said 2 Consent Orders. He asks that the Reimbursement Summons should be dismissed.

35.  Turing to his open proposal, he offers that UK expenses of the children would be covered either by his undertaking to pay the children and/or the service providers directly, or by their access to/use of his credit card. He recognises that items such as management fees, utilities, household expenses, maid’s salary/expenses and pet & miscellaneous expenses in the wife’s household will still need to be paid, but should be proportionately adjusted downwards to reflect that the children are spending about 8 months in UK but only 4 months in Hong Kong.  His latest proposal in the trial is to pay the wife a straight line sum of $25,000 per month to cover the children’s costs at her household.  

The wife’s case & open offers

36.  The wife asks for dismissal of the Husband’s Summons and endorsement of her applications. She claims that the amount of monthly maintenance provided in the 2009 and 2014 Consent Orders was far from sufficient to cover the children’s actual expenses, so that she has been paying out of her own purse in order to upkeep the living standard enjoyed by them during the marriage, to which the husband should reimburse her for such sums incurred by her at least from December 2015 (ie the time when the Husband’s Summons was taken out). And with the increase in age, the children maintenance should be increased to satisfy their increasing needs. 

37.  In her Form E and her 4^th affirmation (both dated 3 May 2016), she claims that the children’s total expenses (excluding boarding schools’ fees) were then standing at $83,026 per month. By the time when the Joint Scott Schedule was lodged in January 2018, her claimed children expenses are increased to $100,060 per month (when the children are staying in UK) or $116,292 per month (when the children are staying in Hong Kong).  

38.   In the trial, however, Mr Surman pointed out that despite the direction of the Joint Scott Schedule, these were not the amount that the wife sought to increase. Such submission triggered the concern of Mr Jeremy Chan who repeatedly asked Mr Surman to state clearly her case on the amount that she sought to vary upwards. It is only on the 3^rd day of trial that the wife, for the first time, submitted her open proposal (dated 1 February 2018). In that open proposal, she accepts the husband’s undertaking to pay the school fees, tuition fees, books and stationery, dental/medical, holiday flights and uninform of the children, and suggests that on top of these undertakings, he should pay her directly $107,658 per month to cover the maintenance of the children, ie $53,829 per child per month.

39.  When the case came back for part-heard in June 2018, the wife made an updated open proposal of 6 June 2018. In this updated open proposal, she basically agrees with the husband’s further revised undertaking, but with a few refinements. She counter-suggests that he should pay her directly the following: [6]

(1) Children maintenance of $40,000 per month (ie $20,000 per child per month);

(2) Reimbursement of $458,475;

(3) Contribution to her litigation costs, including counsel’s fee, of $1 million.

40.  The aforesaid updated open proposal of the wife, however, is not her latest stance. Through the closing submission of Mr Surman, she submits that this court should not accept the undertakings of the husband, because they will be a “recipe for disaster” as he will use every opportunity presented to him to “prevaricate, delay, argue about what he should pay”. Counsel suggests to adopt the amount of $35,500 per child per month in the 2009 Consent Order as the starting point, and the magnitude of increase should be in line with the increase of the wealth of the husband which is at the rate of 340% if compared with his assets in 2008/2009. In effect, he alludes that the children expenses payable to the wife directly should be increased to $120,700 per child per month (or $241,400 per month in total).[7]  

Applicable law on variation of periodical payments

41.  The variation applications of the respective parties are made pursuant to section 11 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”). Section 11(7) provides that 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.

42.  The modern approach in dealing with an application for variation of maintenance is summarised byCheung JA in AEM v VFM [2008] 3 HKLRD 36 at §14, in particularly the following sub-paragraphs:

“4. The modern approach, as required by section 11(7), is for the Court to consider all the circumstances of the cases. The Court is not required to proceed from the starting point of the original order but look at the matter afresh: Flavell v. Flavell [1997] 1 FLR 353 at 357B following Lewis v. Lewis [1977] 1 WLR 409 and Garner v. Garner [1992] 1 FLR 573.

5. Any change in any of the matters to which the Court was required to consider when making the original order was one of the circumstances to be considered.

6. Almost invariably, an application to vary an earlier periodical payment order will be brought on the basis that there has been some changes in the circumstances since the original order was made, for example, continuing inflation; the increased costs in supporting a growing child and that one party may be more adversely affected than another by the increase in the costs of living: Garner v. Garner.

7. An increase in the wealth of the husband was a relevant factor to be taken into account: Primavera v. Primavera [1991] 1 FLR and Cornick v. Cornick (No. 2) [1995] 2 FLR 490.

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.” (my emphasis added)

43.  With the above principles in mind, I shall now proceed to deal with the Husband’s and the Wife’s Summons.

Change of circumstances

44.  There is little doubt in my mind that there have been material changes of circumstances since the making of the 2009 Consent Order.

45.  It is a hard fact that the children have now gone to study in UK, and thus the time that they spend in the wife’s household is much lesser than before. Equally true is that they have increasing need that comes with increased age since the original 2009 Consent Order, not to mention that there is inflation over the years.

46.  It is suggested by Mr Surman that the changes of circumstances advanced by the husband, such as retirement, decline in income and overseas private education for the children, should not be accepted, because these are foreseen, foreseeable and indeed clearly envisaged changes in the circumstances. Counsel says that it is the husband who is keen for the children to study in boarding schools in UK, and thus the costs of boarding schools must be “clear and apparent” to him prior to embarking on that course. This is thus a “self-induced increase” of children’s education expenses in order to try to reduce expenses elsewhere.

47.  With respect to Mr Surman, I do not find any substance in this line of submission. After all, the wife does not suggest in her own evidence that she objects to the children’s studying abroad. Further, it may be argued that it is equally “clear and apparent” to her that the children would be growing up with increasing needs since the 2009 Consent Order.  By applying Mr Surman’s logic, does that mean that this court should refuse her case on change of circumstances, and thus her application for varying upwards of the children’s maintenance? 

48.  In all the circumstances of this case, I conclude that there are ample changes of circumstances of the children and their care arrangement that warrant a change in the payment amount and payment structure of the children maintenance.

Basis and intended effect of the 2 Consent Orders

49.  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 (See: AEM v VFM (supra) per Cheung JA at §14.8).

50.  The major terms and undertakings provided in the 2 Consent Orders are sufficiently set out in the earlier parts of this judgment at [16]-[21], and I shall not repeat them here.

51.  On an overall reading of the terms and undertakings of the 2009 Consent Order, it is obvious to me that at the time of the said settlement, the parties intended to have a clean break arrangement of capital sharing between them, with the intention that the wife would use the said capital payment of $18 million to purchase an accommodation for herself and the children, and if mortgage is going to be serviced, it should be capped at no more than 1/3 of its market price. Further, in so far as children maintenance is concerned, apart from the accommodation (which should be provided by the wife), the husband shall continue to provide a fixed sum to the wife for the benefit of the children. He shall undertake to be solely responsible for their school fees, summer camps (if agreed beforehand) and related air fares through his undertaking. There is no other separate undertaking covering, eg, medical/dental expenses or medical insurance.

52.  As regards the 2014 Consent Order, I have little doubt that its intended effect is to revise downward the monthly maintenance payable to the wife for the benefit of the son, in recognition that he has left Hong Kong for studying in UK. Importantly, it is stated in the preamble of the 2014 Consent Order that both parties agreed that there be a variation downwards of the son’s monthly maintenance payable to the wife,

“in the light of the material change of circumstances of [the son’s] daily care.”

53.  In his written closing submission, Mr Surman says that I should use the 2009 Consent Order as a starting point in considering how much to increase the children maintenance, thereby suggesting that I should not have any regard to the 2014 Consent Order and/or its intended effect. This is because according to the wife, the 2014 Consent Order was agreed by her as a result of the husband’s misrepresentation and intimidation which can be briefly described as below. [8]

54.  On 18 August 2013, which was about 2 weeks before the son was due to leave Hong Kong for study in UK, the husband invited the wife and the children for dinner, during which he mentioned about his financial difficulty in supporting the children’s overseas study in front of the children. After the dinner, the 4 of them went to his chambers, where he suggested reducing the maintenance of the son payable to her.  She says in her 4^th affirmation,

“…With [the son] crying outside and [the daughter] visibly upset by the entire incident, I was placed in an impossible position by the [husband] as I was not at all comfortable with agreeing to his request for reduction on the spot, but at the same time I did not want to keep the children waiting outside in distress. In the end, I reluctantly agreed to the [husband’s] request for reduction.”

55.  I do not believe that the agreement to reduce the son’s maintenance payable to the wife was made under undue pressure. Notably, the consent summons (leading to the 2014 Consent Order) was signed on 19 February 2014, which was 6 months after the alleged intimidation incident. At all material times and it is not disputed by the wife, she was represented by Ms Sharon Ser, solicitor specialising in family law. At the time when the said consent summons was signed, she was represented by reputable solicitors’ firm specialising in matrimonial litigation, namely Withers. It would be an affront to logic and common sense that either she or her solicitors would allow her to sign a consent summons under intimidation.

56.  There was an occasion during trial that Mr Surman suggested to this court that I could have set aside the 2014 Consent Order in this trial of variation of maintenance. I instantly pointed out to him that this suggestion was not in accordance with the authorities (See: Wong Oi Han v Sin Wai Chung [2012] 3 HKLRD 143). Fortunately, Mr Surman did not pursue this argument any more.

57.  In accordance with the case law stated above, I conclude that I should pay due regard to the intended effect of the 2009 and 2014 Consent Orders stated above in deciding the variation applications.

The husband’s financial means

58.  Something needs to be said about the wife’s approach to the husband’s financial wealth which appears in the following.

59.  I shall not repeat the husband’s concession given in the PTR on his ability to pay, which has been set out sufficiently in the earlier parts of this judgment. It is pertinent for me to stress again that his paying ability, or his so-called increase in wealth, is never the triggering event/factor advanced by the wife in her application for varying upwards of the children maintenance. In such circumstances, though his financial resources or ability is a factor to be taken into account under section 7 of the MPPO, it is not a live issue in this trial.

60.  In fact, Mr Surman acknowledges in his opening submission that the only issue before the court is the costs of maintaining the children, unless there is any last minute retreat from the husband’s stance (but there is none on the part of the husband). [9] 

61.  Despite that, Mr Surman spent the 1^st day of trial [10] on cross examining the husband on his Form E filed way back in 2008 and alluded that the husband was “disingenuous” about what he had put down in the 2008 Form E as to, for example, the beneficial ownership of the Pokfulam house and a Shanghai property.[11]  Mr Surman also referred to a Court of Appeal judgment in which the husband was the plaintiff and was described by the court as “thoroughly deceptive”. This line of cross examination into his 2008 Form E continued in the morning of the 2^nd day of trial, whereby Mr Surman later concluded in his final submission that since the Form E in 2008 until this trial in 2018, the husband’s wealth has increased by 340%, from at least $35 million to over $119 million, and suggested that the children maintenance should be varied upwards by 340%. [12]

62.  In the middle of the morning of the 2^nd day of trial, Mr Jeremy Chan finally stood up and formally raised his objection to the further questioning by Mr Surman of the husband’s increase in wealth, submitting that for what had been conceded by the husband and/or confirmed by the court with the parties to be the outstanding issue during the PTR, it was plainly clear that his financial circumstance was not a live issue in this trial. 

63.  In response, Mr Surman explained that since the husband had not confirmed if he agreed to take the 2009 Consent Order as a starting point to increase the children’s maintenance, the wife needed to establish if there was an increase in his wealth.

64.  Upon hearing from both counsel, I accepted Mr Jeremy Chan’s submission and ruled that Mr Surman should not be allowed to continue with his cross examination on the husband’s increase in wealth any more, but he would be free to cross examine him on the living standard of the parties and the children. There are several reasons for such conclusion.

65.  First, the issue to try was already defined in the PTR. I shall not repeat what I have said in [23] to [28] of this judgment.

66.  Second, one has to bear in mind that this is not a trial of ancillary relief matters for capital distribution or sharing at the time of the divorce. It is merely a trial on the subsequent variation of a periodical maintenance payment order. In-depth cross examination on a party’s previous Form E, which was made before the settlement of the ancillary relief matters, to the extent of alleging non-disclosure or false disclosure is unnecessary and should be firmly discouraged. This is because the parties must have given sufficient evaluation or appreciation to the strength and/or weakness of each other’s case before he/she makes up his/her mind to enter into a consent order to settle. This is especially so when a party has the benefit of advice from legal practitioners specialising in matrimonial litigation at the time of the consent order to settle. An application for variation should not be tantamount to re-opening the ancillary relief dispute, if one later finds out that he/she has entered into a bad deal.  

67.  I should reiterate that the wife was represented by solicitors specialising in family law at the time when she entered into the 2009 and 2014 Consent Orders.

68.  At this juncture, I shall gratefully adopt the comment of Lam VP (then Lam J) in the case of HCTT v. TYYC (supra) as follows:

“47. I think the following approach suggested by Stock JA at para.42 of L v C [2007] 3 HKLRD 819 at p.841, 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 a different [terms] to show good and substantial cause why the compact 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.’

48. …

49. …Application for variation should not be pursued when in substance the grounds advanced for variation tantamount to re-argument of the same issues that have been argued before the court before the making of the original order. If a party is aggrieved by the terms of the original order, the proper course is to appeal against that order.” (my emphasis added)

69.  Third, it is obvious to me that the ultimate purpose of the wife’s extensive cross examination of the husband’s wealth and the 2008 Form E is to peg his increase in wealth with the increase in children maintenance. In my view, this is not a correct approach to the section 7 exercise, because it singles out one and only one factor, namely the financial resources of the husband, to determine the level of adjustment of children maintenance, without due regard that the court should undertake a balancing exercise of the factors set out in section 7 of the MPPO, such as the standard of living and the financial needs of the children.

70.  Fourthly, this approach of the wife has also overlooked the remarks made by our Court of Appeal that great wealth may not equate to great extravagance.  In HJFG v KCY, [2010] 1HKLRD 95, Hartmann JA (as he then was) had these to say at §36:

“…It is not simply to be assumed that great wealth equates to great extravagance. Some married couples who enjoy great wealth spend with comparative modesty and with a discipline born of discretion, others enjoy consumption on a grand scale.”

71.  In passing, I should point out that way back in 2008/2009 when the parties were still litigating on the ancillary relief matters, the husband’s mother took out an application seeking that she should be joined into the proceedings to safeguard her beneficial interest in the Pokfulam house and the Shanghai property. I should also observe that the so-called increase in wealth of the husband comprise partly of the increase in the value of the Pokfulam house from about $33 million to about $72 million, which is a passive growth of wealth due to the well-known and rapid rise of property value across the territory over the years and which the wife has also benefited from her own property.

72.  Although the husband’s financial ability to pay is not a live issue in this trial, I shall still say a few words on his financial circumstances in the overall balancing exercise of the factors in section 7 of the MPPO.

73.  The Form E of the husband dated 30 April 2015 shows that the total value of his assets is about $104,390,928. He has liabilities of about $5,616,350. His various bank accounts show an overall deficit of over $1,688,000, and thus he has no liquidity cash. His total net assets, standing at $98,774,578, compose mainly of landed properties and stocks.[13] The landed properties include (i) the Pokfulam house, (ii) a factory unit in Kwun Tong, (iii) a property in the Montpellier Square, London and (iv) a village house in Stevenage, UK, all held by him solely in his own name or via company vehicles. Besides, he owns 33.3% of a farmland in Italy (held through a company vehicle). His various bank accounts showed an overall deficit of over $1,688,000.

74.  In his oral evidence given in the trial, he says that the factory unit of Kwun Tong was already sold at $4 million. The property in the Montpellier Square is now rented out at £1,750 per week. The company holding the Italian farmland has gone into liquidation because of lack of funds to pay the manager who looks after the farmland.

75.  Due to the concession given by him on his ability to pay, I do not propose to analyse in great details the financial circumstances of the husband.  Suffice it is for me to point out to matters and they are these.

76.  First of all, his claimed liability to the amount of over $5.6 million consists mainly of (i) repair costs of the Pokfulam house at $1 million; and (ii) estimated stamp duty/agency fees for disposal of UK properties at about $1.8 million, totalling about $2.8 million. However, even in his own oral evidence, he has not said for sure that he would sell these properties. They are thus pre-mature liabilities which I shall not take into account in this judgment at this stage.

77.  On the other hand, despite his previous claim of decrease in the income of his legal practice, it is plain on his own case that he does have sufficient capital, at least in the form of landed properties, to satisfy any order on children maintenance that I am about to make in this judgment. His claim that the Pokfulam house is now subject to building order(s) would not prevent it from being sold, if needed be, especially if it is in the rising property market. Of course, if it is really going to be sold, allowances would need to be made for another property commensurate to the living standard of the family be bought/arranged to house the husband. 

78.  I shall say more on the husband’s expenses under the topic of living standard.

The wife’s financial means

79.  According to her Form E dated 3 May 2016, the wife says that she is a housewife and a freelance beauty consultant paid on unstable and negligible commission. As said, she owns a 1,600 sq feet flat in Jardine’s Lookout which is worth about $28 million, but subject to outstanding mortgage of about $5.55 million. She has cash of about $453,000 in her various bank accounts and stock worth of over 1.88 million (as at March 2016). Besides, she possesses various pieces of expensive jewelleries mostly gifted by the husband at total estimated value of $1.99 million. On liabilities, she says that she owes her ex-boy-friend a sum of $490,000, being sale proceeds of his car. On her own case, the total value of her net assets is over $26 million.

80.  The wife’s financial means is not a live issue in this trial, though the husband in his affirmation evidence alleges that she is using the children maintenance paid by him to her to fund her mortgage and/or speculate in the stock market. He works out some tables attached to his 7^th affirmation showing that she received unexplained cash or cheques in the total sum of $2.69 million over the period of January 2015 and January 2016 (ie about $207,200 per month on average). The wife does not dispute in her affirmation(s) that she invests in stock market and the logical conclusion would be that these are her gains in the stock market. But apart from all these, it is not suggested by the husband that the wife has any meaningful income.

The living standard

81.  It is trite to say that the reasonable amount of children expenses should be closely connected to the living standard of the parties and the children during the marriage. Further, the current living standard of the paying party, ie the husband of this case, should also be considered, because fairness dictates that the living standard of the children of the family should not deviate substantially from that of the paying party.

82.  In his Form E filed in 2008, the husband says that the family were then living in the family home (the Pokfulam house). It is a 4-storey house of about 3,300 sq feet with a swimming pool and 2 car parking spaces. He goes to describe the living standard as follows:

“(2) our living standard could be described as being commensurate with a middle class family with our 2 children studying at very reputable local schools. We have 2 maids to help with the household chores and looking after the children as well as a driver to take them to and from school.

(3)     I am a member of the Hong Kong Club, the Hong Kong Jockey Club and the Hong Kong Country Club of which the [wife] and the children have the use. I am responsible for paying the membership and subscription fees. My children and I would take holidays 3 to 4 times a year.”

83.  In the same Form E, he puts his total monthly expenses at $283,133, with breakdown as below:

(1)	General expenses	$22,000[14]
(2)	Personal expenses	$143,733
(3)	Children expenses	$12,400[15]
(4)	Interim maintenance	$105,000[16]
	Total:	$283,133

84.  It can be gleaned from the above information that the children of this family enjoyed a living standard that was very comfortable and good, though not one of extravagance. Plainly, the overall living standard was higher than an average middle class family.

85.  Although before the concession on ability to pay is made by the husband, he claims that he has a substantial reduction in his professional income, he continues to spend $553, 359 each month as stated in his updated Form E of 2015 as follows:

(1)	General expenses	$167,109[17]
(2)	Personal expenses	$165,055
(3)	Children expenses	$102,195
(4)	Current maintenance payable to wife/children	$89,000
(5)	Interim maintenance for the Little Daughter	$30,000[18]
	Total:	$553,359

86.  I do take note that the increase of his “general expenses” is caused partly by the fact he now has to pay chambers rent and expenses, as well as mortgage of the Montpellier Square property, and that the increase in “children expenses” is as a result that the children are now studying at boarding schools in UK at his costs.  Nevertheless, his personal expenses alone still stand as much as $165,055 per month, or $145,055 per month if his tax liability ($20,000) is taken into account. He continues to enjoy the exclusive service of a maid. He spends $96,676 each month on dining out, clothing, shoes, personal grooming and entertainment, and another $25,590 per month on club subscription and expenses.

87.  Under such circumstances, I fail to see there is any obvious drop of his current living standard, which is very comfortable and good and is well above that of an average middle class. I will take this into account when deciding on the reasonable amount of expenses of his children. 

Expenses of the children

88.  The children were both at boarding schools as at the trial. By the date of this judgment, the son should have already started university, while the daughter will start university by summer this year.

89.  The starting point is that I hold the view that in all the circumstances of this case, the payment structure of the expenses of the children way forward should be a mixture of some direct payment to the children, some directly to the wife and some by way of the undertakings by the husband. The real issues to decide is how to frame that structure and the amount. I shall approach the issues by first considering the payment structure and amount that should be made directly to the children and/or the service provider(s), after which I shall analyse the amount that should be paid directly to the wife.

Directly to the children or service provider(s)

90.  The husband suggests that the expenses in UK should be covered by his various undertakings to pay directly the service provider(s) or the children. Details of such undertakings are set out in his proposal (marked up in blue) submitted to this court on the 4^th day of trial. In gist, he undertakes to pay not be less than £15,000 per academic year (40 weeks per year) to cover the living expenses of the children at university, which is on top of pocket money of £500 per month and other undertakings to pay air tickets and travelling expenses (including those of their holidays) and medical/dental insurance etc. He adds in his oral evidence that he would pay whatever expenses that are reasonable for the children while in UK, but expects that they would give him a budget each year for discussion after starting university.

91.  Mr Surman for the wife is adamant in submitting that this court should impose a money order instead of accepting undertakings from the husband, because undertakings create more problems in enforcement. He says that the children had problem in using the husband’s AE credit card in the past. For example, the son needed to obtain approval from the husband, via his secretary, to use the AE credit card in booking an AirBnB apartment. For another example, the daughter had problem using the same credit card when she tried to take transport in UK.

92.  It is true that as at the trial, the children can only use the AE credit card online. They do not have a physical credit card. The reason(s) for not having a physical credit card is of no concern any more, given that the husband agrees to provide a physical supplemental AE credit card to each of them. Thus, the problems of using the husband’s credit card as alleged by the wife above is of no concern, either. But in any event, I tend to think that the need of the son to ask the husband for approval to use his AE credit card is a matter of parenting style, rather than a deliberate attempt of him to be difficult to the son. However, I do have concern as to the method of communication between the husband and the children. The evidence shows that the husband instructs his secretary to monitor his AE credit card usage by the children, so that the children have either to seek approval to use his credit card each time through his secretary, or his secretary would check on the children each time when credit card is used by them, no matter the amount is big or small. This may likely to be mis-interpreted by his children that he is over-mindful of money and more importantly has no trust in them, which may adversely affect the development of parent-and-children’s relationship.

93.  Having duly considered all the circumstances and bearing in mind the best interest of the children who have turned into their adulthood, I am of the view that for the children expenses in UK, the payment structure should be partly by way of the husband’s undertakings and partly by way of a court order.  In particularly, I have taken into account the following matters.

94.  First, I do remind myself that the wife, even in her own oral evidence, is not able to tell what is the correct amount of children’s expenses in UK, so that Mr Jeremy Chan submits that such UK expenses should be covered by undertakings rather than ordering a fixed sum.  However, I have concern as to the communication method of the husband with the children on money matters particularised in [91]-[92] above, in that he communicates not directly with them, but through his secretary, on money matters/checking on the use of his credit card by the children, which, in my view, is not a direct and appropriate method in effective parent-and-children communication. Coupled with this, I would say, with respect to the husband, that from my observation on him during the cross examination, he would at times be quite long-winded and agitated when he is being challenged. There were occasions when I had to ask him to calm himself down.  I have an overall impression that he would like to be the one who has the final say in deciding the reasonable spending of the children in UK. Although I do appreciate that guidance from him (who had studied in UK when he was young) to the children in relation to their study life in UK would likely to benefit the children, it is not my wish that they may feel any unnecessary pressure when they discuss with the husband on money matters, especially which they may hold a different view with him. In my view, an order for a fixed sum of money to be given to the children to cater for their recurring living costs would clear away any possible pressure, which in turn is in the best interest of the children. 

95.  Second and also in the best interest of the children, I hold the view that they have already reached their adulthood and that they should, when they start university, learn to be independent in managing their daily lives as well as their finances. Their views and preferences should be respected, though not over-indulged. To achieve this, I think the correct way forward is, on top of the undertakings that would appear in the later part of this judgment, that the husband should pay to each child, upon their entering university, a fixed sum of money each month to cover their accommodation, daily living expenses and weekend excursions, if any, with a built-in annual increment to cater for inflation. In this way, not only can the children learn how to budget their expenses and thus manage their finances, but it would also save them from being sandwiched between any possible argument of the parents on, for example, what accommodation to pick to stay in UK. This will be the fundamental theme for the orders or arrangement that I am going to make in this judgment. 

96.  In this regard I would remind the husband that it is his own evidence that he trusts his children in managing money. He shows that he is very proud of them. He thus should not be over-worried to give them a free hand to learn to manage their daily lives and finances. 

97.  Third, the husband offers, after being shown by Mr Surman some internet information on student’s living costs in UK in the trial, no less than £15,000 per academic year to each of the children when they start university.[19]  In reply to the court’s questions on day 5 of the trial, the husband further clarifies that he would undertake to pay each child no less than £15,000 per academic year (if the university is outside London) or £30,000 per academic year (if the university is within London) to be spread over 10 months, which will come down to £1,500 (outside London) or £3,000 (within London) per month. He will continue to pay £500 per month to each child as their monthly pocket money.  The total effect will be that the children, when studying at university, will each have £2,000 per month (outside London) or £3,500 per month (within London) for their accommodation and living costs.

98.  I accept the above suggestion is reasonable, subject to one qualification. I am of the view that a simpler and broad brush approach should be adopted, so that this sum should be paid to the children each calendar month and should not be confined to the months of the school terms. There are several reasons for such a conclusion. Firstly, it is more likely than not that rent will have to be paid anyway during the tenancy even through the children go away for term breaks or holidays. Secondly, the husband says that he would prefer the children to spend more time overseas to interact with other students rather than returning to Hong Kong during term breaks or holidays, which means that the living costs during such term breaks or holidays would have to be catered for. Thirdly, I have not overlooked the likelihood that the children will in any event return to Hong Kong during long holidays, which means that they will not have daily living costs incurred in UK (except rent) during such holidays. I do realise that by ordering the husband to pay them each month, he may be paying them extra. But as said, a broad-brush approach should be taken. And such extra sum, if any, can be utilised by the children for, eg, weekend excursion or entertainment with their peers, thus saving them from asking the husband for more money each time. This would also provide a chance for the children to plan how to save up or use their money.      

99.  Fourth, it is noted that the children will have a supplemental credit card from the husband with credit limit of £3,000. This will add as a buffer for one-off or additional expenses, such as moving costs or set-up costs of their accommodation.

100.  Upon due consideration, I conclude that I shall make an order for the husband to pay £500 per month to each child as their pocket money. Further, when and from the time each of the children starts university, the husband shall pay each of them £1,500 per month (if the university is outside London) or £3,000 per month (if the university is within London) to cover their accommodation and living costs each calendar month throughout the year. All payment shall be made on the 1^st day of each month until they each complete their full time education and be paid into the bank account opened in the name of each child pursuant to the undertaking stated below.

101.  I shall accept the husband’s undertaking or hold him to the undertaking, as the case may be, which shall be set out more clearly in the later part of this judgment.

Directly to the wife

102.  For the purpose of computing the expenses of the children in the wife’s household, the husband is willing to accept that the children spend about 4 months in Hong Kong and 8 months in UK each year. As a way forward, he suggests to pay her an “average-out” amount each month (which is calculated on the basis of 8 months in UK and 4 months in Hong Kong). I accept that this is a sensible approach which I will adopt in the order to be made in this judgment.

103.  I should remind myself of my finding that the living standard of the children during the marriage was good and very comfortable, and so does the husband’s current living standard. I shall adopt this living standard as a benchmark in considering the reasonable costs of the children in the wife’s household.

104.  The wife sets out her total monthly expenses in her household, including those of the children, in her Form E and 4^th affirmation and says that the children’s share of general expenses and their direct expenses are in the total amount of $83,026 per month.  There, she does not make any difference between the expenses while the children are in UK or in Hong Kong. Then, in the Joint Scott Schedule, she gives a breakdown of children expenses in UK and in Hong Kong. During the trial, she makes 2 open proposals. The husband gives his response/ counter-offer during the trial. All these are re-produced in the table attached at the end of this judgment (“Table”) for easy reference.

105.  I do not propose to go into details of each and every disputed items of expenses, but would focus on the more major ones, to be discussed in the following sub-headings.

(i)  Mortgage

106.  The wife claims the monthly mortgage repayment of her flat in full as children maintenance, but Mr Jeremy Chan for the husband avers that it is a capital provision which she is not entitled to claim any more.

107.  I agree with the submission of Mr Jeremy Chan and hold the view that it is principally not correct for the wife to claim her monthly mortgage repayment under the pretext of children maintenance. Plainly, the overall effect of the 2009 Consent Order, in particularly her undertaking  mentioned in [19] above, suggests that it falls on her, but not the husband upon paying her a lump sum of $18 million, to provide comfortable and suitable accommodation for the children at her own costs. Upon due consideration, I reject her claim for mortgage as children maintenance.

(ii)  Repairs & maintenance

108.  The wife states in the Joint Scott Schedule that the repair and maintenance of her household is $2,500 per month, irrespective whether the children are in UK or in Hong Kong. She mentions in her 7^th affirmation that her flat is now subject to a building order and reinstatement work needed to be done. [20]  In her 2^nd open proposal dated 6 June 2018, she offers $1,700 to settle this item with the husband.

109.  It is the submission of Mr Jeremy Chan that the wife’s claim for repairs and maintenance of her flat, if any, are of the nature of capital improvement and thus will be rejected for the same reason(s) set out above.  However, I note from the oral evidence of the husband that he is amenable to offer $377.77 to cover the children’s share of repair work in the wife’s household, such as the flooring of the daughter’s bedroom. [21]  His logic is that the children spend only 4 months at the most in Hong Kong each year and thus the offer of the wife at $1,700 should be adjusted pro rata to reflect the same. 

110.  I treat the above as an open concession made by him. However, I take the view that the suggestion of $377.77 as to the amount is very unreasonable and has totally disregard the living standard of the children and the well-known trend of increasing costs of handy-man’s work. Balanced against this view is the logical fact that it is unlikely that repair work would need to be done every month.  Doing the best I can, I will adopt the medium figure between the wife’s open proposal of $1,700 and the husband’s concession of $377.77 (rounded up to $380) and order that he shall pay $1,000 per month to contribute to the children’s share of the repair work of the wife’s household.

(iii)  Utilities & household expenses

111.  I have looked into the account statements of the wife’s HSBC premier account (which show the spending of her premier master card and visa card) and CX Elite credit card, from where she settles the utilities, government rates etc. [22]    I find out that these expenses vary more with the changes in weather rather than the fact that the children do not stay in her household when they are in UK. For example, more gas expenses are incurred during winter time, while electricity expenses tend to be higher during summer time.  I also notice from her CX Elite credit card statements showing her monthly expenses on landline telephone, netvigator/now TV and mobile telephone (including her own mobile bills) etc amount to over $1,500 per month.[23]  Such expenses cannot be subject to much variation because a contractual fixed sum would likely have to be paid each month no matter whether the children are in Hong Kong or not, though it is noted that the wife’s own mobile telephone is also included but should not be borne by the husband any more. 

112.  Overall, I do not accept the husband’s contention that the utilities, rates and telephone bills during the months when the children are in UK would be less as much as half of such bills when they are in Hong Kong. His suggestion of a mere $500 difference in household expenses for 2 adult children between the time when they are in UK ($1,000) and in Hong Kong ($1,500) is unreasonable, if not mean.

113.  Taking into account all of the above, I am of the view that a straight line sum of $5,000 and $2,000 per month would be reasonable to reflect the children’s share of the utilities and household expenses in the wife’s household, and I will so order.

(iv)  Food 

114.  The wife’s figure of $9,000 per month during the time when the children are in Hong Kong is reasonable and is more commensurate with the living standard enjoyed by the husband himself. According to his 2015 Form E, he spends $96,676 per month for meals out, clothing and shoes, personal grooming and entertainment. Breakdowns of these items are not provided, but if I am to average out the spending among these 4 items, it would mean that he spends more than $24,000 each month on his dining-out.

115.  The average out monthly sum is thus $3,000 per month.

(v)  Car expenses

116.  The wife claims that she drives her Porsche to pick up/take the children between the airport and her home. The husband, however, says that the children usually take public transport to/from airport, or pick up by him.

117.  To begin with, I do not find that the statements of the wife’s HSBC premier account and CX Elite credit card support her claim that she spends as much as $4,550 per month on car expenses while the children are in Hong Kong. Further, I agree with Mr Jeremy Chan that the husband should not be made to pay for the maintenance and licence in relation to her Porsche. I do not think that she keeps her Porsche solely for the use/benefit of the children, because they are no longer toddlers who need to be escorted all the times. However, since they are close to the wife, which is indisputable, it is more likely than not that she would pick them up from the airport and/or see them off by driving her car from time to time. It is also likely that she will drive them or any of them around for shopping, dining-out or other activities from time to time while they are in Hong Kong. Hence, I need to take into account the petrol, toll fees and parking fees. I will give a broad brush and straight line figure of $1,000 per month.

(vi)  Pet expenses    

118.  I accept the wife’s claim but would round it down to $2,000 per month, taking into account that pet expenses cover food, medicine and grooming.

(vii)  Other direct expenses of children     

119.  I accept the husband’s suggestion that most of the children’s direct expenses, especially those in UK, can be dealt with by way of direct payment to the children and/or service provider(s). These sums need not go through the wife anymore. The only remaining items of serious dispute are (i) entertainment/presents, (ii) holiday expenses with the wife, and (iii) clothing, shoes and grooming.

120.  The children are now adults and they would, if not already, be provided with pocket money and a supplemental AE credit card (with credit limit of £3,000) by the husband.  No doubt they would be shopping, with the pocket money and/or supplemental credit card provided by the husband, for their own clothes/shoes or for electronic gadgets/accessories more often, but this would not preclude the chance that they will be shopping with the wife or asking the wife to buy for them, given the close relationship between them. In fact, the evidence shows that the wife did buy several men’s suits for the son at G2000 when he went to study in the boarding school, which costs her about $7,137. I also need to take into account that when they are in Hong Kong, they may dine-out or go to the hair salon with the wife, it would be very likely and reasonable that she will foot the bills totally.

121.  According to her Form E and her 4^th affirmation, the wife says that the entertainment/presents for the children is $5,000 per month, but in the Joint Scott Schedule, it is strangely reduced to $2,530 per month.  Given the very comfortable and good living standard enjoyed by the children, I do not believe that the entertainment (which is taken to include dining-out in this judgment) for the children while they are in Hong Kong would be as low as $2,530 per month for 2 children. Fairness and their living standard together dictate that I should adopt the figure of $5,000 per month, which is the figure she states in her Form E and 4^th affirmation.  For clothes, shoes and grooming, I rule that a straight line payment of $3,000 per month is more commensurate with their living standard.   

122.  In the Joint Scott Schedule, the wife puts forward the figures of $20,525 per month for holiday expenses and $18,000 per month for holiday flights, including flights between Hong Kong and UK during school terms. The total holidays and flight expenses would thus be $38,525 per month (or $462,300 per year). In my view, this is excessive, as the children would not be travelling for holidays (with or without her) every month. Besides, she admits in her oral evidence that such figures have taken into account the air tickets of the children that the husband has undertaken to pay.

123.  I accept that the flights, including holidays flights with the wife and/or flights between Hong Kong and UK can be dealt with by way of the husband’s undertaking to pay directly to the service provider(s), or by reimbursement to the wife upon production of invoice and flight itineraries/electronic tickets.

124.  I think the hotel room expenses can also be handled in the same way as the flight expenses set out above.

125.  For the other holiday expenses with the wife, such as food, entertainment and local transport, I take into account that it is stated in the husband’s 2008 Form E that the children had 3 or 4 holidays each year.  But I also take note that even in her own oral evidence, the wife accepts that as the children grows older, they would be holidaying more with their peers rather than with their parents. Upon due consideration, I hold the view that if flight and hotel expenses, as well as travel insurance, are covered by the husband’s undertaking, a straight line payment of $6,000 per month to cover the holiday expenses with the wife is reasonable.

126.  The postage of parcels, in my view, cannot be regarded as unnecessary. The amount is minimal. It should have been accepted by the husband.

Summary of children expenses

127.  For avoidance of doubt, I set out below my ruling on the amount and payment structure of the children expenses payable each month:

	Amount per month (for 2 children)
General
Mortgage	NIL
Utilities, rates & mobile phones for the wife/ children	$5,000
Management fee	$3,433
Food ($9,000 x 4÷12)	$3,000
Household expenses	$2,000
Car expenses, including maintenance, petrol and licence	$1,000
Insurance including medical and travel insurance	By undertaking
Domestic helper	$6,000
Repairs & maintenance	$1,000
Pet expenses	$2,000
Sub-total (i):	$23,433
Children
School fee	By direct payment to children and/or service provider(s)
Extra tuition fees
School books and stationery
Transport to school
Medical/dental
Extra-curricular activities
Holiday flights, including flights between HK and UK during school breaks + hotel room expenses
Other transport
Lunches/allowances & pocket money
Uniform
Entertainment/presents	$5,000
Clothing/shoes/grooming	$3,000
Holidays expenses with wife	$6,000
Misc transport	$1,333
Postage of parcels/mails for children	$200
Sub-total (ii):	$15,533
GRAND TOTAL (i) + (ii):	$38,966 (rounded up to $39,000 for both children, or $19,500 for each child)

The Reimbursement Summons

128.  I shall approach the Reimbursement Summons under the following sub-headings.

(i)  Background

129.  The Reimbursement Summons comes about in this way.

130.  On the 3^rd day of the trial (which was originally supposed to be the last day of trial), the wife, for the first time, provided her written open proposal to the husband and this court. Towards the end of that day, Mr Surman said that he wished to produce to the court “Schedule A”, a table setting out the amount of “reimbursement” of children expenses that was referred to in her open proposal. This was objected by Mr Jeremy Chan, who submitted that this trial did not cover a reimbursement claim, because the Wife’s Summons did not have such an application.  And since this trial did not cover a reimbursement application, he had not prepared for the same nor had he taken any instruction from the husband who was then already in the witness box.

131.  In response, Mr Surman argued that the claim for reimbursement was part and parcel of an application for variation of maintenance, suggesting that a formal summons was not necessary. He added that in any event, the wife had made known her claim for reimbursement of children expenses by way of her 7^th affirmation. He was thus very frustrated that the husband’s side took up this highly technical point.  

132.  As I told Mr Surman instantly upon his submission, I was not the docket judge of the case. I was not alerted by the wife in the PTR hearings that she had a reimbursement claim. The plain wording of the Wife’s Summons suggests that she only seeks to increase the amount of children maintenance; she does not even ask to backdate the variation to be ordered.  As such, Mr Jeremy Chan could not have been faulted for raising the objection mentioned above.

133.  However, since it was quite clear that she would insist claiming for reimbursement, I came to the view, as I told Mr Jeremy Chan during the trial, that it would be more time-saving and costs-saving to deal with all these in one trial, as the main trial for variation had to go part-heard any way. Under such circumstances, I directed that the wife should take out a formal application for reimbursement, to be heard in the part heard of the main trial for variation of maintenance. I also fixed a call-over hearing returnable on 15 May 2018 to make sure that everything would be in place before the part heard of the trial resumed in June 2018.

134.  In the hearing of 15 May 2018, I clarified again and Mr Surman confirmed that the wife was not seeking back-dating of the variation. As Mr Surman put it, the wife’s case was that these reimbursements were children expenses that the husband got to pay under the original Consent Orders.

(ii)     Discussion

135.  By the Reimbursement Summons, the wife demands the husband to reimburse her children expenses in the aggregate sum of $928,333.82 as follows:

(1) a total sum of $807,538.28 incurred between December 2015 and 31 October 2017;

(2) a total sum of $120,795.54 incurred between 1 November 2017 and 27 February 2018.

136.  The nature of these expenses mainly relates to the children’s medical/dental/eye care, extra tuition and extracurricular activities, their flights to and from UK and other holiday flights, half term holiday with the wife including costs of accommodation, transport, meals and spending, and the wife’s flight and travel costs to UK. According to the wife, these are expenses which the husband has undertaken to pay but did not.[24]

137.  Mr Jeremy Chan raises strong objection to Reimbursement Summons. He points out that the paraphrasing of “reimbursement” suggests that these are items that the husband is required by the 2 Consent Orders to pay but has failed to pay. This is a “mis-conceived” application. But if this court accedes to her claim for reimbursement, the husband proposes to set off her reimbursement claim against the back-dating.

138.  I have to say that I agree with Mr Jeremy Chan’s observation. It is indisputable that the 2009 and 2014 Consent Orders provide for a fixed monthly maintenance payable to the wife by the husband for the benefit of the children. On top of such fixed monthly maintenance, he gives his undertaking, for example, to pay for the children’s school fees and 1 set of return air ticket per year. The said Consent Orders have not made separate provisions, be it by way of orders or by undertakings, for the husband to pay, on top of the fixed monthly maintenance and his undertakings, for medical insurance, extra-curricular activities/extra tuition, or more than one flights to and from UK and other holiday flights of the children.

139.  As a matter of fact, the wife realised, as she fairly concedes during the trial in the cross examination, that the items sought by her under the Reimbursement Summons are not expressly covered as a separate payable item in the said Consent Orders.

140.  It is the submission of Mr Surman that the figures in the wife’s reimbursement claim, supported by receipts, are legitimate and reasonable expenditure, and that the court has a discretion to award any figure it believes justified.  With respect to counsel, I am unable to agree with him for the following major reasons.

141.  One has to bear in mind that it is the wife’s case that the Reimbursement Summons is part and parcel of her application for variation of children maintenance, which comes under section 11 of the MPPO. Section 11 (2) therein provides that this section applies to an order made under section 5(2)(a) or (b) or 5(4) only. [25]  Plainly, the Reimbursement Summons does not fall within the perimeter of section 11 (2) of the MPPO.

142.  Further, if it was correct that the reimbursements are expenses which the husband has undertaken to pay but did not, what the wife should have done is to take out enforcement proceedings pursuant to rule 87 of the Matrimonial Causes Rule and in accordance with the latest guidance set out in YBL v LWC [2017] 1 HKLRD 823.

143.  Upon due consideration, I conclude that the Reimbursement Summons should be dismissed.

The undertakings and the order

144.  The husband proposes that if the Reimbursement Summons is dismissed, he would not seek back-dating of his variation. There is no back-dating application by the wife.

145.  As said, by the time this judgment is handed down, the son is already at university and the daughter will be starting university this summer. I expect that the daughter will be preparing for her university accommodation or living arrangement 1 month before the school term starts, ie since or in August this year.  

146.  Due to all the matters discussed and set out aforesaid, I shall accept or hold the husband to the following undertaking which shall take immediate effect (unless stated the otherwise) until each child completes their full time education:

(1) to punctually pay boarding school/university fees, school related expenses billed by the school/university including extracurricular activities, extra tuition;

(2) within 28 days from the date of this judgment, unless he has already done so, to open a bank account (which include a debit card and with standing instructions to pay regular monthly bills such as rent, mobile telephone) in each of the children’s name at his chosen bank in UK, which shall be guaranteed by him should any of the children’s bank account goes into debit;

(3) to make arrangement with AE credit card provider within 14 days from the date of this judgment for provision of a physical supplemental AE credit card to the children with a credit limit each of £3,000, which shall be sent to the children either directly from AE credit card provider, or by the husband within 14 days upon receipt of the same;

(4) to pay directly to the service-provider(s) or the children the air tickets, hotels and travel insurance of the children including those trips that they take without the accompany of either parent, or those trips that they take with the wife, and at least 2 Hong Kong/London return trips per year for each child; or to reimburse the wife of the same within 14 days upon production of invoices and flight itineraries/electronic tickets;

(5) to pay the children for other reasonable travelling expenses, such as meals and local transport, of those trips that they take alone or without the accompany of either parent during term breaks or school holidays;

(6) within 42 days from the date of this judgment, to arrange/purchase a medical insurance coverage for the children inclusive of an outpatient gold card at his costs, and to pay the medical and dental expenses of the children, including orthodontic, checking and cleaning teeth, not otherwise covered by NHS and/or the said medical insurance; and to provide a copy of the said insurance policy to the wife for her records within 14 days upon receipt of that policy from the insurer;

(7) to pay directly to the service-provider(s) or the children the contact lenses and eyeglasses of the children including checking of prescriptions; and

(8) to pay directly to the service provider(s) any extracurricular activities and/or extra tuition of the children while they are in Hong Kong; or to reimburse the wife of the same within 14 days upon production of invoices or receipts.

147.  Based on the above undertaking, I shall make the following order:

(1) Paragraph 3 of the 2009 Consent Order and paragraph 1 of the 2014 Consent Order shall be varied to the effect that the husband shall pay the wife for the periodical monthly maintenance of the children in the sum of $39,000 per month, ie $19,500 per child per month, with the first payment to commence on the 1^st day of June 2019 and thereafter on 1^st day of each month until each child ceases full time studies or until further order, in accordance with the payment method stated in paragraph 4 of the 2009 Consent Order;

(2) The monthly children maintenance payable to the wife shall be adjusted annually in accordance with the CPI index released by the HKSAR government on the 1^st day of June each year; 

(3) The husband shall pay each child pocket money in the sum of £500 per month throughout the calendar year on the 1^st day of each month starting from 1 June 2019, which shall be adjusted annually on the 1^st day of June in accordance with the CPI index released by the UK government, until each child ceases full time studies or until further order;

(4) Starting from 1June 2019 (for the son) or from 1 August 2019 (for the daughter), and thereafter on the 1^st day of each month, the husband shall pay each child an additional sum of £1,500 per month (if their university is outside London) or £3,000 per month (if their university is within London) throughout the calendar year to cover their accommodation and living costs, which shall be adjusted annually on the 1^st day of August in accordance with the CPI index released by UK government, until they each ceases full time studies or until further order;

(5) The payment of items (3) and (4) under this paragraph shall be made into the respective bank account of the children to be opened pursuant to the husband’s undertaking mentioned above;

(6) The Reimbursement Summons is dismissed;

(7) A penal notice be endorsed;

(8) Personal service of this court order be dispensed with;

(9) Liberty to apply in respect of the implementation of this order;

(10)    The order shall be drawn up by the husband’s legal team.

Costs

148.  On costs, I take into account the following:

(1) In respect of the cross applications on variation of maintenance, neither party can be said as an overall winner of the case. None of their open proposals as to the amount or payment structure is fully adopted by this court;

(2) The husband is the winner of the Reimbursement Summons;

(3) In his variation application, the husband did put forward his lack of financial means as a reason to vary downward the maintenance payable to the wife for the children. He conceded only in the PTR of 11 August 2017 on his ability to pay. Such concession shall be proportionately reflected in the costs order, at least for those costs incurred before the said PTR;

(4) The lengthening of the original trial of 3 days to 6 days is caused by both parties one way or the other. Importantly, the wife did not make it known in the Wife’s Summons that she had a reimbursement claim and thus took out last minute formal application for reimbursement. She spent unnecessary time to cross examine the husband on his 2008 Form E to establish non-disclosure or false disclosure. I shall not repeat what I have observed at [66] of this judgment.  On the other hand, the husband did not raise his objection of this line of cross examination until the 2^nd day of the trial. He did not provide any meaningful counter-suggestion to the wife’s figures in the Joint Scott Schedule until the opening submission of his counsel, in which case she is not able to know his case in terms of the amount of the reasonable costs of the children until then.

149.  I thus take the view that a costs order nisi that there be no order as to costs of all the said 3 summons and this trial, including any costs reserved, should be made. Such order nisi shall be made absolute within 14 days of this judgment.

[1] Wife’s 7^th affirmation [P1/245/§16 & 258//§96].

[2] [P8/2162]

[3] [P8/2163]

[4] Opening submission at §32.

[5] The husband was required to repay the mortgage of $5 million by June 2016, ie well before the commencement date of this trial. In any event, his ability to pay was conceded in the PTR hearing of 11/8/2017.  

[6] Wife’s updated open proposal attached to the letter of Stevenson Wong & Co dated 7 June 2018.

[7] Wife’s closing submission at §§101 – 102.

[8] Wife’s 4^th affirmation [P1/69/§12].

[9] Wife’s written opening submission at §29.

[10] The husband’s evidence started at about 3.35 pm on the 1^st day of trial.

[11] In the previous Form E filed in 2008, the husband claimed that his mother was the joint beneficial owner of the Pokfulam house, and the sole beneficial owner of the Shanghai property. In the Form E filed in 2015, the husband said that he was the sole owner of the Pokfulam house. In his oral evidence, he says that he gave the Shanghai property, in addition to $5 million cash, to his mother in order to settle the public spat between them. 

[12] See §§64-66 and the table attached to the wife’s closing submission dated 22 June 2018.

[13] The value of his stock is about $8 million.

[14] The “general expenses” involving the wife and the children are covered in the item of “interim maintenance”.

[15] These included mainly school fees and holidays of the children.

[16] The interim maintenance covered the general expenses of wife and the children, and most of the items of children expenses under part 4.3 of Form E.

[17] In his Form E, the husband says that the rent and chambers expenses cost him $80,931 per month, which is reduced to about $26,000-$27,000 per month as at the trial.

[18] The most updated monthly maintenance payable for the benefit of the Little Daughter is $80,000 per month.

[19] Exhibits P-2 and P-3.

[20] Wife’s 7^th affirmation [P1/248/§34]

[21] $1,700 x 2/3 x 4 months ÷ 12 months = $377.77

[22]Wife’s HSBC premier account statements from February 2015 to March 2016 [P3/641-680] & CX Elite credit card statements covering 11 October 2015 to 4 April 2016 [P3/739-753].

[23] [P3/739-753].

[24] Wife’s 7^th affirmation at §16 & 96 [P1/245&258]

[25] Section 5 of the MPPO is about financial provision for the child of the family. Section 5 (2) (a) concerns periodical payments; section 5(2)(b) is about secured periodical payment; section 5(4) relates to lump sum payment by instalments.