SES also known as SBE-S v. HKL

FCMC 7243/2008

[2023] HKFC 27

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 7243 OF 2008

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BETWEEN

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J U D G M E N T

( Reinstatement of Maintenance )

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1.  By an Order made in June 2017 (“2017 Variation Order”) after the Petitioner Husband (“H”) sought a downward variation of a previous Ancillary Relief Order made in April 2011 (“AR Order”) following his redundancy, the following Orders were made:

“ …

2. Order 5 contained in the Order dated 13 April 2011 shall be suspended until such time as the Petitioner finds another job or he embarks on a new venture which is income producing AND IT IS FURTHER DIRECTED THAT the Petitioner do inform the Respondent and the Court in the event that he becomes gainfully employed on either a full or part time basis or he becomes involved in a venture that is income producing within 4 weeks of commencing such a position.

3. Order 6 contained in the Order dated 13 April 2011 shall be varied to the extent that … (b) the Petitioner do pay maintenance for E … in the sum of HK$33,000 … until such time as the Petitioner finds another job or embarks on a new venture which is income producing or until further order…”

2.  This 2017 Variation Order was made after a two-day hearing whereafter HHJ Melloy handed down her Judgment on 28 June 2017 (“2017 Variation Judgment”). This inter alia provided for the Respondent Wife’s (“W”) maintenance to be suspended; and daughter E’s monthly maintenance to be reduced from $40,000 to $33,000. H was to continue to pay for E’s school directly and 70% of her medical and dental expenses.

3.  In around the time the 2017 Variation Order was made, H moved to Vancouver with his second family. W discovered in July 2021 that he has incorporated GH, a franchised care-home business (“GH”). When she failed to elicit responses from H on GH, she initiates the present Summons on 10 January 2022 for:

“Reinstatement of maintenance of HK$55,000 to W and HK$40,000 to E, or upward variation of the maintenance and to be back dated to the time when H became gainfully employed or when he became involved in a venture that is income producing.”

Parties background

4.  Parties are both 52 years old, both are Korean nationals. They were married in July 1998. There are two children of the family, son N who is now 24, and daughter E who just turned 18 in December 2022. N no longer features in these proceedings as he now works and lives in the US. E plans to pursue her university studies in the US in the upcoming summer.

5.  H previously worked as a Managing Director of an international bank and used to make an annual income $4.3 – 11.8M; the family enjoyed a standard of living which commensurate with this level of income.

6.  W has always been a housewife. It is accepted that she does not have significant earning capacity.

7.  H filed for divorce in June 2008. Following a long trial leading to the AR Order, decree absolute was pronounced on 15 July 2011.

8.  H remarried in 2015, there are now two children with his new wife who are respectively age 6 and 1.

9.  Facts unfold to reveal that H incorporated GH on 18 July 2017 which provides care services in Vancouver. He has been the sole shareholder and director since July 2017. In Court, he was cross-examined on his issuance of these minor shareholdings to one of his staff. Despite this minority interest, it is W’s position that H’s ownership and control of GH means GH is H’s financial resources.

Previous proceedings

10.  In the original AR Order, H gave undertakings to pay for school tuition directly and ECA subject to a cap, H was to pay spousal maintenance of $55,000 and $40,000 to each child.

11.  Under the AR Order was an order for sale of a real property (“B Property”) with sale proceeds to be divided equally. Despite this, the property has not yet been sold and parties have been sharing the rental income of $29,000 and bearing the liabilities therefrom. H issued a Summons for sale of the B Property on 22 December 2022 and despite an order to do this, the parties have still failed to agree on the sale price somewhere between $37- 42M. The B property is clear of mortgage.

12.  H was made redundant in June 2016, which led to his application to vary down maintenance then, resulting in the 2017 Variation Order.

13.  It is W’s case that the suspension is not meant to be a long term measure, she quoted from the 2017 Variation Judgment at §22:

“… it does not seem to me that it would be appropriate to simply discharge the wife’s maintenance order altogether, although I do accept that it should be suspended until such time as the husband finds another job or he embarks on a new venture which is income producing. At that stage the issue of the wife’s maintenance maybe looked at again …”

14.  The 2017 Variation Order also provided for University tuition payment for N, H’s share being capped at $240,000 per annum, and the parties to share equally any amount over annual school fees exceeding $480,000. H also undertakes to pay for E’s school fees at an international school and 70% of her medical / dental expenses.

H’s case

15.  At the PTR on 19 October 2022, H’s counsel took the position that H has not erred in failing to inform W and the Court about GH, as he said that he did not receive any income from GH. H did not attend the PTR as he was not in HK. Based on his case, I raised the issue on the distinction between “profit making” and “income producing” with his counsel.

16.  In his opening submission, H says he has no salary from GH and has not received any dividend, that GH was not making any money until 2019, and he has not earned any income from GH. He says he interprets the 2017 Variation Order as “income producing to him”.

17.  H proposes the following for this application:

a. $0 for W (no change)

b. $33,000 for E (no change)

c. University tuition fee for E capped at $250,000, and only for E’s first degree.

18.  He maintains that GH is not making money, and has a long way to go before the financials are good enough to pay a larger amount of maintenance than his proposals.

19.  H argues that he is physically unfit and now has a new family to look after. He also says the W’s expenses are exaggerated.

W’s case

20.  W asks for the amount of maintenance made under the AR Order to be restored. She repeatedly says that she is not asking for H to pay the $320,000 declared in her Form E expenses. For this reason, she also says that it is therefore irrelevant how much her expenses are.

21.  She says she has funded N’s Master degree and that H should do the same for E should she elect to take a second degree.

22.  Under existing undertaking from H, he is supposed to pay for 70% of E’s medical and dental expenses, but W has alleged that he had failed to pay, or delayed in payment, and argued E’s need for braces. However, it turns out that H has only recently paid up some outstanding medical and dental expenses after this hearing.

23.  W alleges that H has failed to fulfil his obligation to give full and disclosure of his financial information. As recent as October 2022, W requested for GH’s credit card statements, tax documents, his tenancy agreement and his own bank account and credit card statements. W’s case finds that H has failed to produced statements from an undisclosed credit card; W is able to trace that H has made payments with this undisclosed credit card, and H falters in his explanation when cross examined in court. H has also failed to disclose three credit cards which he claims to be inactive; but W is able to point to some spending of at least one of these alleged “inactive” credit cards. W therefore alleges that she is unable to assess his true expenses, and how these credit card bills are settled. It is further pointed out by W that as these cards were used, and his disclosed bank statements do not show these undisclosed credit card expenses being settled, there must be further non-disclosure. The Court is invited to draw adverse inference against H on his ability to pay.

Reinstatement Application

24.  While the W’s Summons is framed as a reinstatement of the previous AR Order, this is in effect an application for variation of the 2017 Variation Order, and hence the legal principles for variation should apply. This approach also gives effect to what HHJ Melloy intended, quoted at Paragraph 13 above.

Legal Principles regarding Variation of Maintenance

25.  The empowering legislation is in Section 11(1) and (7) of the Matrimonial Proceedings and Property Ordinance (Cap 192):

(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section, the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.

….

(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of the matters to which the court was required to have regard when making the order to which the application relates and, where the party against whom that order was made has died, the changed circumstances resulting from his or her death.” (emphasis added)

26.  The modern approach in dealing with an application for variation of maintenance is summarised by Cheung JA in AEM v VFM [2008] 3 HKLRD 36 at §14, in particular 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)

27.  Principles are trite. There should be some change of circumstances since the previous order was made. The Court has wide discretion which includes backdating arrangement and I am entitled to look at the case de novo. For the purpose of this application, I do not accept that there is to be an “automatic” resumption of maintenance from the AR Order asked by the W; I will be looking at both parties’ financial positions and needs anew.

Issues

28.  The issues I have to consider are as follows:

1) Is GH income producing

2) H’s financial resources

3) W’s financial resources

4) H’s needs

5) W’s needs

6) E’s needs

7) Should the AR Order regarding maintenance for W and E be reinstated

8) Should there be backdating of the maintenance orders

Discussion

29.  Regarding H’s position that the venture he embarks on needs to be income producing to him to trigger his obligation to inform the Court and W, I find this position disingenuous. It is incomprehensible to me that he could come to this conclusion. If he did not understand the meaning of paragraph 2 of the 2017 Variation Order at the relevant time, he would surely have comprehended when he is legally represented for this application. The wordings of the Order are in plain and clear English, I am of the view that H has deliberately interpreted it in the way that best serves his interest.

30.  I find that he is in breach of the 2017 Variation Order with reference to his obligation to inform W and Court of his position. H now tries to brush it off by saying this has now been “superseded by subsequent events”, which is this present hearing.

31.  At the beginning of the trial, I sought to confirm again H’s position regarding GH, after seeking counsel advice, he conceded just before the lunch break that he accepts that interpretation of the 2017 Variation Order refers to a venture which is income producing; in short, he no longer holds the position that the Order is interpreted as “incoming producing to him”.

32.  H urges me to look at all the circumstances of the case and review the respective positions anew.

Credibility of Witnesses

33.  I find neither of them to be particularly credible witnesses.

34.  I find on a balance of probabilities that H has further undisclosed financial information which are not before this court. His answers during cross examination with regard to his credit cards and bank statements clearly indicate this.

35.  On the other hand, I also find W to have exaggerated her expenses, a lot of which looks unbelievable and clearly unsupported. This observation is also in line with HHJ Melloy’s findings in the 2017 Variation Judgment and in the Judgement from 2011 which led to the AR Order.

H’s Financial Resources

Is GH making money

36.  H has been the sole shareholder and director of GH since its incorporation in 2017. He gave evidence that he has granted one employee 6.8% of the company shares, to support this, he put into evidence three letters to the said employee sent in March 2020, April 2021, and April 2022. Despite this, information provided by H in his answer to questionnaire in October 2022 shows only his name on GH’s shareholder register.

37.  H says he has injected initial capital of CAD400,000 and CAD314,600 into GH (“Loans”), from which he is still receiving repayment after GH starts making money. So far, he has received repayment of at least CAD85,400 on 4 June 2020 and the CAD209,304 on 23 April 2021. From the attachment to his June 2022 Form E with reference to paragraph 5.5, he says his outstanding on the Loans stands at CAD105,296, which he expects to recover by the end of the first half of 2023.

38.  He has also borrowed a loan from the government, which should be largely repaid by December 2021; with CAD40,000 still outstanding as of 26 May 2022.

39.  H says he is not GH’s employee, he does not have a salary, nor a director’s remuneration. He says he will not be receiving any dividends pay out until full repayment of the Loans, and only after there is enough retained earnings in GH to cover its potential liabilities and risks.

40.  According to the financial statements produced by H, GH’s financial figures in the last few years are as follow:

Year	Revenue	Operating Income	Retained Earnings
2019	CAD644,000	CAD 21,997	(CAD144,688)
2020	CAD1,545,681	CAD367,888	CAD208,040
2021	CAD1,976,260	CAD359,916	CAD528,680

41.  From GH’s 2021 unaudited financial statement, the operating income of CAD359,916 and retained earnings of CAD528,680 at today’s exchange rate of 5.8 translate to $2,087,512 and $3,066,344 respectively.

42.  H argues that there is a need to maintain a certain level of retained earnings to operate GH; in court he says there has been increasing expenses, especially in terms of staff expenses, and potential litigation.

43.  However, as H is the Director and a majority shareholder (as alleged by him of 93.2%) of GH, he can singlehandedly make decisions for all the financial issues about GH, he confirms as much under cross examination. Clearly, he has the option of seeking to have the Company repays the Loans, or he can receive director’s remuneration, or declare dividends in any amount and as to timing. It is clear that he is extracting money from GH’s accounts, it is in his discretion how he labels these withdrawals and as to how much. I asked in Court whether there is any mandatory requirement under Canadian corporate /accounting rules that Loans must be first repaid before dividends can be declared, and he said no. H only says in court he has consulted tax advice on this approach but nothing has been put forward to support these decisions.

44.  W’s counsel has argued that in the management of financial matters in GH, H has chosen to have GH repay the Loans first, and then has deliberately kept the retained earnings in GH so that he receives no income, which will enable him to support his “income producing to him” interpretation of the 2017 Order.

45.  I find that GH is H’s alter ego, and for him, it is a clearly a left and right pocket issue. He has access to all the liquidity of the company, I therefore find that he has the financial resources to make payment to both W and E, the question is a matter of quantum. GH is clearly profit making and according to H’s oral evidence, has plans to expand in Greater Vancouver.

46.  I am also conscious that once the B Property is sold, H will be in better liquidity position; and with proper management of his funds and liabilities, his ability to pay for W and E will not be disputable.

47.  W argues that if it is true that H has been merely receiving Loans repayment after GH starts making money, then he is supporting his family from other sources of income hitherto; and hence his profit from GH can surely support W’s asks of maintenance for herself and E. I find some force in this argument.

W’s Financial Resources

48.  It is not in dispute that W has no earning capacity, this was the finding back at the AR Judgment in 2011, and reiterated in the 2017 Variation Judgment. Therefore, the W’s financial resources is limited to what she received from the capital division during the divorce.

49.  Parties have submitted an agreed /disputed schedule of assets and liabilities. It can be seen that the matrimonial pot is somewhere between $60-65M, with the bone of contention being the valuation of the B Property. Based on the W’s higher estimate of the value of this property, the respective split is thus: W has $34,230,000 and H has $31,573,000. The position is therefore, that W has more liquidity in her possession with zero earning capacity, and H is building GH’s business and has been trending increasing profit despite high operating costs, and is making plans to expand.

50.  It is fair to say that the parties have more or less the same capital base now, not unlike HHJ Melloy’s starting point back in 2017 when she looked at the variation application then. I therefore follow the same rationale that W should also be contributing to E’s expenses.

51.  As the conversation on the disposal of the B Property has been picked up, it is also likely that she will soon come into more liquidity when the B Property is sold. Although she may lose the shared rental income of $14,500, she will not be needing to pay management fees nor tax on the B Property anymore.

H’s Expenses

52.  In his Form E dated June 2022, he declares to have the following expenses, without taking into account $33,000 for E:

Items	Amount
General expenses	$55927.80
Personal expenses	$44,776.00
Children expenses	$70,329.67
TOTAL	$117,033.47

53.  Therefore, adding E’s school fees at $21,000 and monthly maintenance of $33,000, he says his expenses amount to $171,033.47. On his case and echoing my point above, this is what he has been paying since the 2017 Variation Order while building GH business which has no income in the initial years, he clearly has the resources to support this spending.

54.  On a high level examination of H’s numbers, which were not substantively supported, and cognizant of the fact that these expenses are in Canada, his declared amounts of spendings of $11,000 on food, $3,623 for domestic helper, $11,200 for meals out of home, $4,230 for entertainment, and $7,550 for holidays look a bit excessive; especially compared to what he counter-offered on W’s expenses (see §§61 and 67 below).

55.  He says this is a reasonable level of spending taking into account he now has a family of 4 in Vancouver. H’s counsel has quoted to me from Jackson Matrimonial Finance, 10^th Edition at §3.126 the following excerpt:

“… one of the very great difficulty … The law being as it is, it is quite impossible for the court to ignore the just claims of the first wife because the man has taken on himself other obligations, although the courts have to take into account those obligations, as involving a reduction in the capacity of the man to pay for the upkeep of his first wife [and child].”

56.  I wish to add the following quote from the same source at §3.127:

“Remarriage means that the payer spouse has assumed new financial burdens and responsibilities, and pro tanto his or her means may decrease; prima facie there is a decrease in the available resources out of which he or she can make provision for his former spouse and family; but bearing in mind this consideration the court will try to give the former spouse and children such orders as will protect their standard of living: it is ‘bearing in mind this consideration’, not ‘subject to it’”.

57.  In W’s closing submission, her counsel calculated that based on H’s main Canadian bank account, which is used to settle his three disclosed credit cards, his spending amounts to an average of $84,000 per month over a period of 6 months in 2022.

58.  The position I need to consider is whether H can continue his obligations to W and E in the light of his new family and obligations. I believe he has exaggerated his expenses. Further, my view is that offering to pay W nothing is not acceptable in these circumstances; this will be further discussed below.

W’s expenses

59.  I am convinced from W’s evidence that she has also exaggerated her expenses.

60.  According to W’s responses in court, the settlement of her expenses comes from her HSBC bank account and credit card, and one Korean credit card (used while in Korea); H’s counsel has analysed her numbers, and says it adds up to around $50,000 per month. H maintains that this is her monthly expenses.

61.  The following shows the numbers assessed by HHJ Melloy in the 2017 Variation Judgment, those declared by W in her Form E in January 2022 and June 2022, and counter proposal from the H.

General Expenses

	2017 Variation Judgment	January 2022 Form E	June 2022 Form E	H’s Counter proposal
Rent and management	55,000	43,800	43,800	33,000
Utilities	4,500	4,000	4,000	4,000
Management Fees	5,000		1,920 Belcher
Food	10,000	15,000	34,000	10,000
Household	1,000	1,000	2,000	1,000
Car	5,000		1,500 3 months in Korea	500
Insurance	1,000
DH	N/A	3,000	6,000	1,000
Other:	1,000 B maintenance	3,000	2,500 Pet, telephone, moving expenses	1,000
SUBTOTAL	82,500	69,800	95,720	50,500

62.  H argues that W should further downsize after E has left for studies. I said “further” because it appears that W’s rental expense has been reduced per her recent Form Es compared to that prior to the 2017 Variation Judgment. I am of the view that where children have departed for studies overseas, it is incorrect to sweepingly dismiss the need to take into account their portion of the general expenses. Afterall, the child will return on vacations and continue to reside at the W’s residence, taking up their consumption in utilities, food and household expenses. W says the present residence has two rooms, and no space for son when he comes home. That said, while I will not assess a lower level of rent in this decision, W should consider moving to less expensive accommodation when E goes away to study and she does not have to live close to E’s school, so that she can economize.

63.  Furthermore, in view of the fact that E will be leaving in the summer for the university education, the general expenses of the W should be lower, and I assess these on this basis while accepting that E will return to Hong Kong over her holidays.

64.  Her expenses are unsupported in general and her oral evidence does not assist her case. One good example is her claim on food of $34,000 in her latest Form E. At cross examination, it was put to her that those items that show up as food in her credit card come up to around $6000, which means she spends $28,000 cash on food. I do not find her answer to the questions convincing; to this item she also said she has food sent from Korea, and that it does not appear on her expenses because her family paid for it first. I do not accept this. I will only allow an assessment of $12,000 on this item.

65.  H clearly challenges these spendings. Out of the various items, I also do not accept that a household of two person requires household expenses of $2,000 per month. Her evidence regarding the domestic helper is not convincing, it seems she only has a part time helper, with no good reason that this expense has doubled over 6 months. Her car expense relates to only when she is using the family car when in Korea for three months a year, it also looks excessive.

66.  The following is my assessment of her general expense:

GENERAL
Rent and management (rounded up)	44,000
Utilities	4,000
Food	12,000
Household	1,500
Car	500
DH	3,000
Others (include pet related):	2,000
SUBTOTAL	67,000

67.  Wife’s personal expenses

Items	2017 Variation Judgment	January 2022 Form E	June 2022 Form E	H’s Counter proposal
Meals out of home		7,000	5,200	4,500
Transport		5,000	4,200	2,500
Clothing / Shoes		1,000	2,000	2,000
Personal grooming		1,500	1,000	1,000
Entertainment / presents		2,500	1,000	1,000
Holiday		7,000	12,500	4,000
Medical / Dental		4,000	4,500	3,000
Tax (B Property)		5,000	6,096	7,000
Contribution to parents		3,000	1,500
Dependent family members: N (son)		10,000
Others:		1,000 Pets	6,500 English lessons	1,500
SUBTOTAL		47,000	44,496	26,500

68.  I do not feel the need to dive into details of the W’s personal expenses except to comment on some vast differences between the January 2022 and June 2022 Form Es. Needless to say, H also challenges these and I have to agree.

69.  $7,000 for holiday sounds excessive, and there is certainly nothing to suggest why her costs of holiday has increased from $7,000 to $12,500 over 6 months. Nor is it accepted she has a sudden need for English lessons at this point in time after 20 years in Hong Kong and at $6,500 per month. Furthermore, when the B Property is sold, no doubt the related expenses like management fees and tax expenses will fall away.

70.  My assessment of the W’s personal expenses are as follows:

Meals out of home	5,000
Transport	3,000
Clothings / Shoes	2,000
Personal Grooming	1,000
Entertainment / presents	1,000
Holiday	5,000
Medical / Dental	3,000
SUBTOTAL	20,000

71.  Erika’s Expenses

Items	2017 Variation Judgment	Jan 2022 Form E	June 2022 Form E	H’s Counter proposal
School Fees	Paid by H	Paid by H	Paid by H
Extra Tuition	2,000	4,000	2,800	1,000
School books & stationery	1,000	1,000	600	600
Transport to school	2,200	2,800	4,500	1,200
Medical / Dental	3,000	4,500	3,500	1,000
ECA	2,000	2,000
Entertainment / Presents	1,500	1,500	3,000	2,000
Holidays	3,500	4,000	12,500	3,500
Clothing / shoes	3,000	3,000	3,000	3,000
Lunch / pocket money	4,000	5,500	9,000	5,000
Other Transport	1,000	1,500	1,280	1,200
Uniform	300
Others: school electronics, accessories	1,500	2,500		1,500
SUBTOTAL	25,000	32,300	40,180	20,000

72.  The following is my assessment for E, and taking into consideration that she will be away from Hong Kong upcoming summer, the overall amount should also cover her expenses in the US until further Order:

Items
School Fees	Paid by H (subject to §80 below)
Extra Tuition	3,000
School books & stationery	1,000
Transport to school	1,500
Medical / Dental	3,500
ECA	0
Entertainment / Presents	2,000
Holidays	5,000
Clothing / shoes	5,000
Lunch / pocket money	5,000
Other Transport	1,000
Others: school electronics, accessories, miscellaneous	3,000
SUBTOTAL	30,000

73.  Out of the expenses to be ordered for E, I shall also order that H is to pay E directly $10,000 commencing from the month she leaves Hong Kong for studies overseas this year until she completes her studies for the first degree.

Apportionment of Expenses

74.  I am apportioning the H and W share of expenses as below. In principle, H will have a bigger share of the shared expenses, this is because H continues to have earning capacity and in a business that is making money and expanding; while the W in essence has none and relies on the capital she received from the divorce proceedings. W will pay part of her own personal expenses as below (i.e. $14,000).

	H pays		W pays
	For W	For E
General $67,000	$44,666 (2/3) Round up to $45,000		$22,000 (1/3)
	$30,000	$15,000
Wife personal $20,000	$6,000		$14,000
E’s expense $30,000		$20,000 (2/3)	$10,000 (1/3)
	$36,000 (30.7%)	$35,000 (30%)	$46,000 (39.3%)

75.  For this application, W’s maintenance shall be varied to $36,000, and E’s maintenance shall be varied to $35,000.

76.  For the avoidance of doubt, I have arrived at this decision based on the parties’ respective resources and needs, the upcoming sale of the B Property, and H’s obligation to his current family.

E’s University Fees

77.  At this moment, H is paying for E’s school fees at an international school in HK.

78.  The principle is clear that the obligation to pay for the child’s university education ceases on her attaining her first degree. Whether parents will continue to fund a more advanced degree is a matter of discussion and choice. H’s counsel referred me to the case of NH v SH FCMC 11845/2007, 15 May 2017, and I accept the principle therein. I am therefore only looking at the H’s obligations up to the completion of E’s first degree.

79.  H argues that $250,000 per year he pays for in tuition at E’s current school would be more than enough for most top universities in the world, save for some more expensive private US colleges. He further contends that since he has been excluded from the decision-making process of E’s future university and therefore the cost of an expensive US college should not be imposed unilaterally on H unless W is also willing to contribute.

80.  I am of the view that the Father’s proposal of the annual cap of $250,000 to be on the low end. H paid for N at $240,000, and this was back under the 2017 Variation Order. Some level of inflationary element must be taken into consideration. Echoing HHJ Melloy’s thinking process, both parents should contribute to E’s education payment but conscious of W holding only onto her nest egg with no earning capacity, I am of the view that H’s contribution to E’s University tuition should be increased to $300,000 per year, such payment shall be paid up to the completion of E’s first degree. I shall apply the formula previously adopted in these proceedings, that is, if E’s university tuition is more than $600,000, H and W shall share equally any tuition fees in excess.

81.  It goes without saying that H’s contribution to E’s tuition fee in Hong Kong should continue until she completes her secondary level education this year.

82.  I am mindful of H’s argument that he now has two more young children to support. However, support for E is only for 3 – 4 years from Summer 2023, when she finishes her first degree, his children from his current marriage will be 10 and 5. His financial obligations to his first family will be substantially decreased then, save for maintenance for W.

Backdating

83.  W argues that there should be backdating of maintenance. I take the position that there shall be backdating from January 2020, which is when GH is not “in the red”. Although GH did start making some income in 2019, I have given some buffer to the timing, W never challenged the numbers in GH’s financial statements.

84.  On the basis that I intend to order W’s maintenance be at $36,000, the backdating of this sum should be somewhat tie to GH’s income producing progress. Therefore:

From January – December 2020 at $20,000 to W = $240,000

From January 2021 and going forward $36,000 to W = $864,000 (Up to and including December 2022)

This maintenance payment of $36,000 to the W shall be paid during the joint lives of the parties or until W’s remarriage, whichever is the shorter.

85.  Given that I have assessed maintenance for E is to be $35,000. I shall make an Order that this maintenance for E is to be backdated from January 2020, H has to pay $2,000 to E more from then, being $72,000 ($2,000 x 36) up to and including December 2022. I am not adjusting this amount in accordance with GH’s income as it is relatively small.

Costs

86.  Having in mind H proposes to pay nothing for W, and $2,000 short of my Order for E; and having considered both parties’ litigation conduct, I make an Order that H is to pay for 50% of the W’s cost for these proceedings.

H’s Undertaking

87.  As H has not sought to be released, I expect him to continue with his undertakings as stated in Recital E of the 2017 Variation Order.

Orders

88.  The 2017 Variation Order be varied as follows:

i. Order 2 therein be varied to the extent that the Petitioner shall pay spousal maintenance to the Respondent at $36,000 per month commencing from 1 January 2023 and thereafter on the 1^st of each month during the parties’ joint lives or until her re-marriage, whichever is the shorter.

ii. The Petitioner is to pay back-payment to the Respondent in the sum of $1,104,000 for the period from January 2020 to December 2022.

iii. Order 3(b) therein be varied to the extent that the Petitioner shall pay maintenance for E at $35,000 per month commencing 1 January 2023 and thereafter on the 1^st of each month until E completes her first degree in university education. The H shall pay $10,000 out of this $35,000 to E directly and the balance of $25,000 to W commencing from the month E leaves Hong Kong for overseas studies.

iv. The Petitioner is to pay back-payment for E’s maintenance in the sum of $72,000 for the period from January 2020 to December 2022.

v. The Petitioner is to pay for 50% of the W’s costs arising from and occasioned by her Summons dated 10 January 2022 including all costs reserved, to be taxed if not agreed, with certificate for counsel. This be an order nisi to be made absolute 14 days from this Order.

AND IT IS FURTHER DIRECTED THAT: -

vi. The Petitioner do pay E’s college / university tuition fees at $300,000 per year. If the fees are not greater than $600,000 per year, then the Respondent shall pay for the shortfall. If the fees are more than $600,000 per year, then the Petitioner and the Respondent shall equally share the amount in excess of $600,000.