SJH v. AMS

FCMC 5963/2016

[2023] HKFC 140

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 5963 OF 2016

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J U D G M E N T
(Committal Proceedings)

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1.  This is the Committal Hearing of the Judgment Debtor who is the Respondent Husband (“H”) following the Examination Hearing which took place on 8 December 2021.

2.  The allegation made by the Petitioner Wife (“W”) is that H has breached a Consent Order made in 2018 (“2018 Consent Order”). H has failed to comply with the following terms:

i.   The Order whereby he is to pay child maintenance at £2000 per month for child of the family, A, which is to be inflation adjusted on an annual basis.  W says that H should be paying £2,453 from May 2022.

ii.   The Undertaking to share equally A’s education costs and related expenses.

iii.  The payment of £34,390 within 12 months of the liquidation of the H’s Savings Plans.

iv.  H’s undertaking to be responsible for the mortgage and costs associated with a London property and to indemnify W of any costs incurred in relation to that property.

Procedural History

3.  H has failed to pay maintenance for A from 1 June 2019.

4.  On 23 June 2020, W took out her first Judgment Summons (“First Judgment Summons”).

5.  On 27 July 2021, W took out her application for an attachment of income order (“AIO Summons”).

6.  On 29 July 2021, H applied to vary the terms of the 2018 Consent Order.  On the return date of his Summons on 30 August 2021, HHJ Melloy gave him leave to file a further summons for Variation of Maintenance and be discharged from previous undertakings; H never acted on this, and nothing was filed.  At the subsequent hearing on 20 September 2021, HHJ Melloy directed the Examination Hearing to take place on 8 December 2021.

7.  On 7 December 2021, W took out her second Judgment Summons (“Second Judgment Summons”).

8.  Subsequent to the Examination hearing, W took out the present Summons for Committal on 20 April 2022, which was then fixed to this current hearing.

9.  The AIO Summons was first heard on 11 October 2022, and following a short adjournment, dealt with by paper disposal on 7 December 2022 (“AIO Judgment”). A number of attachment orders were made:  these include payment of interest on outstanding payments in December 2022 and January 2023, payment of arrears and current payments from February 2023, and for costs from 31 March 2023.

10.  H filed his two Form Es on 23 December 2020 and 16 August 2021 respectively.

Outstanding Amount

11.  It is W’s case that H has ceased maintenance payment since 1 June 2019; and that he has the financial resources at the relevant time and has chosen to pay everyone else but A’s maintenance and schooling.  Furthermore, she says that his present predicament is self-generated.

12.  At the date of this Hearing, it was submitted that the outstanding amounts owed to W are as follows:

	Items	GBP	HKD (@10.20 as at 18/7/2023)
(1)	Outstanding maintenance for A  (inflation factored) -      June 2019 to May 2020 -      June 2020 to December 2022	25,962.48 73,012.62
(2)	School expenses from June 2019 to November 2022	5,108
(3)	School Fees for Summer Term 2018/2019 and Autumn Term	16,500
(4)	Capital Sum owing under Recital L (iii) of the 2018 Order	34,390
		154,973.13	1,580,725.93

13.  The above amounts, with more detailed breakdown, were provided at this Hearing, and was confirmed by H to be the amounts owing.

14.  Despite settlement proposals put forward by W on 10 September 2021, 10 December 2021, and 7 June 2022; she said that H has failed to respond.

Background

15.  Parties married in March 2005.  At the time of this hearing, W is 60, and H is 61.  The child of the family, A, was born in November 2006, and now aged 16.

16.  W petitioned for divorce on 18 May 2016, HHJ Melloy ordered joint custody of A on 24 August 2017, with care and control to W, and reasonable access to H.

17.  W and A relocated to England in August 2017, where A is now studying.

18.  Decree Absolute was granted on 14 June 2018. 

19.  H has a new family in Cambodia, he remarried in November 2018.  According to his Form E of August 2021, his new wife’s income is $1,000 and she has a house valued at $970,000.

20.  At the time of this Hearing, W is the chief executive of a law firm in the UK and H works at a company called OGHKL, but he informed the court that he has just received news that he was terminated.

W’s case

21.  W submits that H’s evidence at the Examination Hearing and under the Attachment of Income proceedings shows that he has or has had since the date of the 2018 Order the means to pay the sums in respect of which he has defaulted; and has refused or neglected to pay such sums.

22.  Her case is further elaborated below.

H’s case

23.  H’s opening submission was not received in time for the hearing.  H attempted to hand it up on the date of the hearing, but was told that it would not be read. 

24.  He chose to give evidence and was cross examined.

25.  H sent in his opening submission to Court three days after the hearing on 19 December; his closing submission is practically a repetition of the points he made in the opening.

26.  His submission asks this Court to dismiss the W’s Committal Summons and allow him sufficient time to make good and satisfy his financial obligations, and to make no Order as to Costs.

27.  He emphasizes that W is a Chief Executive Officer of a law firm in the UK earning a good salary with benefits, that she is fully aware of his dire financial situation and still pursue “oppressively” these proceedings via an international law firm and spent a lot of money on legal fees to do so.

28.  H also said he is not deliberately in contempt, just that he has not been financially able to meet the terms of the Order either because he has no available funds; or the funds he had was necessarily for his own living expenses or to prevent him from “losing his SFC licence”; and that he was not able to secure permanent employment at a level of salary close to his high-paid job back in 2017.

29.  He repeatedly said that he would make good his outstanding payments; and that he would pay when “financially able”. 

30.  As he is in the financial industry, he also said that putting him in prison will cost him his professional licence.

The Law with regard to Civil Contempt

31.  It is trite that the objective behind the law of civil contempt is to ensure that litigants appreciate the importance of complying with orders of the court.

32.  The 3-stage test which summarized the principles set down in the case of Kao Lee & Yip v Koo Hoi Yan (2009) HKCFAR 830 at 846 B-C, are as follows:

a.  The Court has to construe the relevant court order to ascertain its meaning and operation;

b.  Then determine whether the defendant has in fact complied with the Order so construed; and 

c.  Finally, to consider any failure to comply was accompanied by a state of mind necessary to establish punishable contempt.

(Hong Kong Civil Procedure 2023 52/1/16)

33.  In the recent case of Koo Ming Kown v Chan Chi Mong, Hopkins [2020] HKCFI 2827, the Hon Au Yeung J further elaborated at para 16 of the case,

“As to the requisite state of mind in civil contempt, it is not necessary to prove that the alleged contemnor’s conduct was contumacious, i.e. that he directly intended to disobey the order: it is sufficient to prove (a) that he knew the facts which are said to make his act or omission a contempt, and (b) that such act or omission was not accidental Hong Kong Civil Procedure 2021 52/1/17”

34.  W’s counsel also brought my attention to the case of BT v YHK [2020] HKFLR 399, the Court of Appeal decision which endorsed the above principles; and further says that H is this case fits the same comment in head note 4 of the case which reads:

“… the judgment debtor’s inability to repay the W was self-generated as he chose to prioritise his family members and financial creditors over the commitments he had to the W under the 2015 Order.”

H’s access to funds

35.  The relevant period of non-payment for A’s maintenance and education expenses in question is therefore June 2019 to December 2022, over 3 1/2 years.

36.  Counsel for the W made detailed cross-references in her submissions based on the transcript of the Examination Hearing, and W’s 9^th Affidavit (dated 17 March 2022) which summarises the evidence from the transcript, H’s Form Es, and his answers to questionnaires.

Regarding the payment of £34,390 from the Saving Plans

37.  H received three tranches of payment, namely $388,670.52 on 4 June 2018, $865,178.97 on 7 June 2018 and $882,960.80 on 9 July 2018.  This totals $2,136,810.29 which he admitted to come from the liquidation of the Savings Plans, but he never paid W the £34,390 per his undertaking in the 2018 Consent Order.

38.  At the Examination Hearing, he said these monies went to payment of his legal bill for the divorce, W says he did not produce any documentary support to that effect.

Regarding payment for the London Property

39.  On 18 September 2019, H received in his UK account £16,090.  H admitted that this was 12 months of rent for the London Property but made no contribution to the mortgage payment in contravention of his undertaking in the 2018 Consent Order.  W’s counsel quoted from the transcript of the Examination Hearing:

“Court: Sorry, can I just get this right. So you received the rental but you didn’t contribute towards the mortgage at the same period of time.

JD: Um...

Court: Is that your evidence?

JD: I was paying - I believe I was paying some for the mortgage payments, but I don’t know when I ceased making those mortgage payments. I knew during that time...

Court: At this time, so for this period. So this is a 12-month payment in advance, you’ve told us.

JD: Yes. That’s correct.

Court: So from September 2019, for the next 12 months, did you contribute towards the mortgage?

JD: I don’t believe I did, your Honour, no”

40.  This part of his evidence clearly speaks for itself.

Financial resources during the relevant period

41.  Just prior to his default in May 2019, H was receiving deposits into his HSBC account.  On 2 April 2019, there was a deposit of $102,689.39.  He did not recall where this amount came from (but said that he paid out $60,000 to American Express (“AE”) on the same day).

42.  H wrote to W on 23 July 2020 that he received $318,750 from employment by his previous employer PB Partners in the previous year. More specifically, as recorded in the W’s 9^th affidavit, he received from them $100,000 on 3 June 2019, $50,000 on 2 July 2019 and $100,000 on 26 July 2019.  H defaulted in his maintenance payment, W received nothing; while H chose to pay AE $25,000 on each of 5 June 2019 and 30 July 2019 respectively.

43.  H received total deposits of $457,666 between September 2019 and May 2020 into his HSBC account but failed to identify the source of these deposits in his answers to questionnaire.

44.  H received a total of £7,726.97 from consulting work with O’Connell Whiskey, being £4,743.21 on 21 July 2020, £1,482.76 on 25 August 2020, £1,501 on 3 September 2020.

45.  H admitted at the Examination Hearing (December 2021) to having received over $600,000 in income from OGHKL; and failed to pay the W.

Loans

46.  Revealed in his answers to questionnaire and the August 2021 Form E, is H’s receipt of over $1.3 million in loans from 14 personal friends.  These liabilities were not in his November 2020 Form E, which means they were incurred over the nine months in between, and fell into the relevant period of default.  Not only has he not used these monies to pay the W, he has provided no loan documentation in support of these liabilities.

47.  At the Examination Hearing, H confirmed obtaining financial assistance by taking out personal loans with UA Finance of $47,000 on 2 September 2019 and $50,000 on 10 February 2020.

48.  H said he borrowed £28,000 from his mother between 12 December 2018 and 26 May 2020.

49.  The ability to borrow is clearly a financial resources, the above amount totalled ($1.3M + 97,000 + (£28,000 x 10.2)) = $1,682,600.

Employment Income

50.  In the AIO Judgment, DDJ Chow found that H’s then current monthly income was at least USD14,000, being income of USD4,166.67, and pre-paid commission of USD10,000 (equivalent to $108,500) from his employer OGHKL; and his tax return for the financial year 2021/2022 recorded an income of $1,987,616, effectively $91,468 per month.  Despite H saying that the commission portion of his income needed to be paid back to his company, DDJ Chow found that this has never happened.

H’s expenses

51.  Looking at his Form E on 16 August 2021 and excerpt of H’s Statement of Means (filed under the AIO proceedings) reproduced in W’s 9^th Affidavit, his monthly expenses include: his personal expenses of $11,000 for food and household expenses, $8,000 on transport, grooming, meals out, holidays and entertainment; and maintaining private club membership $2,250.  He has failed to provide any documentary evidence in support of, inter alia, his monthly expenses or credit card statements. 

52.  DDJ Chow in her AIO Judgment has found that his monthly expenditures are excessive, I agree.  He does not appear to live like a person who owes children maintenance in excess of $1.5M.

53.  He declared $30,000 of debt repayment with no documentary evidence.

54.  He declared in his August 2021 Form E that he has to pay $25,000 to his dependant family members, this is clearly not the W nor A in these proceedings.

55.  He paid $55,800 for a Rolex watch and a Cartier Engagement Ring for his new wife in Cambodia.

56.  All these at the expense of paying for his son A under the 2018 Consent Order.

Prioritising other payments

57.  H withdrew a total of $191,685.23 from 3 September 2018 to 19 September 2019 and transferred $73,331.18 to third parties from 5 September 2018 to 19 September 2019, he was asked about these amounts in the W’s questionnaire and he was unable to give any explanation as to the purposes of these transactions.

58.  H said in his 2^nd Form E that he is paying USD1,000 to his Cambodian wife to help with her mortgage, and admitted at the Examination Hearing that he prioritised this payment to his obligation under the 2018 Consent Order.

59.  H also admitted to paying USD2,000 per month to his current wife at the Examination Hearing.

60.  He has continued to make payment towards his AE credit card, some of which were mentioned above.

61.  He has continued to pay for his membership and said this club membership is maintained for his son, his business, and his occasional relaxation.

62.  H admitted to paying £1,679 for his gift of a paintball gun for A instead of paying for his school fees.

H failure to disclose information

63.  W produced a table of missing bank statements from First Direct, HSBC and Standard Chartered Bank, and it is clear that the statements produced by him were haphazard, and a number of these are missing from each account. 

64.  He did not explain what happened to $634,392.42 in various online trading accounts, no supporting evidence was ever provided.

65.  W says that H never explained satisfactorily why he was unable to sell his US land valued at USD30,000 collectively.

66.  Sometime during these proceedings, W came across mail addressed to H and received by her which revealed H’s assets with N Wine. This was never disclosed, but since this came to light, she has received the amount of £998.52 on 17 November 2022 from the liquidation of these assets.

67.  At numerous times over the Examination Hearing, he repeated that he has not been able to make proper disclosure because his documents are “in storage”, when asked why he could not retrieve it, he said he was in Cambodia, and when back in Hong Kong, he said it is too costly to do so.  He says at the Examination Hearing that it didn’t strike him as necessary, and then at the Committal Hearing he said it was “impractical” to do so.  He also said at the Committal Hearing that “it costs me over $10,000 to access the storage area and have it unpacked. I don’t have the spare money.” W’s counsel says that it was a further affront that H does not make payment to W yet continues to incur monthly storage charge of $10,000.  This is another factor in respect of him prioritizing other payments.

68.  W’s counsel also submits that H had in July 2022 sought extension of time for filing his affidavit on the pretext of waiting for supporting documents from HSBC. When his affidavit was eventually filed, and despite having 2 ½ months to complete his affidavit in August 2022 to complete his affidavit in opposition, he still failed to provide supporting documentation, which to date remained unavailable.

69.  H has failed to make full disclosure at the examination hearing, on HHJ Melloy’s questions, he said he would, but continued in his failure to do so up to the time of the Committal Hearing.  This is best summarized by referring to W’s counsel submission:

“As stated, the JD did not provide proper disclosure even at the Examination Hearing. The JD’s Answers to the JC’s Questionnaires were extremely lacking. The JD has failed to provide proper supporting documentation relating to inter alia, his living expenses, personal loans of over HK$1.3 million, his assets of $1,047,526.50 disclosed in his 1^st and 2^nd Form E, proof of sale of shares, proof of multiple debts the JD alleges having paid. A year later JD has still not properly accounted for the defects in his disclosure.”

70.  As close to the Committal Hearing as 8 December 2022, W wrote to H for updates regarding his Pensions; no supporting documents were produced up to the time of this Hearing.

H’s allegation about his employment

71.  H started working at OGHKL from 1 June 2021.  As stated above, his income is close to $100,000 per month.

72.  At this Committal Hearing, it came to light that H said that he has been terminated from his job, and that he would be replaced. He said he heard this 3 weeks before the Committal but only produced a letter from his Employer dated 15 December 2022 after the Committal hearing in January 2023.  The letter says that as part of the company’s “continued development in Asia”, H’s role will cease on 14 December 2022; that they are working out the transition for H, and the package to be discussed will only related to a limited role for H. 

73.  Together with the H’s closing submission is an email from his employer dated 30 January 2023 that H’s last working day was 28 February 2023.

74.  In W’s closing submission, she says that this development happened shortly after the AIO Judgment was handed down, and is clearly yet another attempt on the H’s part to avoid the AIO.  Despite the said Order, no payments has been made thereunder as at January 2023.

75.  As a result of his employment situation, DDJ Chow had to discharge the AIO by her order of 15 June 2023. The AIO summons and proceedings thereafter had been rendered nugatory.

Conclusion

76.  The case law is clear that it is not about H’s intention to disobey the Order or not.  The part of the Order which were in default is clear, H agrees to the outstanding amounts at this Committal Hearing, his default is not accidental.

77.  Drawing from the evidence before me, it is also clear that prove W has proven her case beyond reasonable doubt. 

Sentencing

78.  I will turn to the sentencing hereinbelow.

79.  I invited H to make his submission on mitigation. He said that he had made a round of payment after the Committal Hearing, of approximately £15,000. He then said he will pay when he has the opportunity to pay. W’s counsel confirmed the only one-off payment was £13,538, being in part for outstanding arrears and also school fees for A.

The principles on sentencing

80.  The relevant sentencing principles have been summarised in Bruno Arboit as sole liquidator of Highfit Development Co Ltd v Koo Siu Ying (No 2) [2016] 3 HKLRD 154 at §§2 to 8, Au-Yeung J:

“2. The starting point is to acknowledge that contempt of civil court orders is a serious matter and that court orders are made to be obeyed. A prime consideration of the court in sentencing contempt is to ‘signal importance of demonstrating to litigants that the orders of these courts are to be obeyed’. By ‘litigants’, it is clearly referring to litigants in general and not just the contemnor himself.

3. The object of the sentence is both to punish conduct in defiance of the court’s order and to serve a coercive function by holding out the threat of future punishment as a means of securing the protection which the order was primarily there to do. … The court has to balance the 2 objects.

4. The sentence for contempt may range from a fine to a term of imprisonment. The UK Contempt of Court Act 1981 imposes a maximum term of 2 years’ imprisonment but Hong Kong does not have that statutory limit.

5. Imprisonment should be regarded as a sanction of the last resort. Any custodial sentence should be as short as possible consistent with the circumstances of the case.

6. The court may suspend a term of imprisonment for such period or on such terms as the court deems fit: … Order 52, rule 7. This is an “absolute discretion” but it would be difficult to think of circumstances where a suspended order should be made when nothing further remains to be done to comply with the order.

7. The court will consider if there are:

(a) Aggravating factors;

(b) Mitigating factors; and

(c) Acts to purge the contempt.

8. Relevant factors (which are not exhaustive) include:

(a) The nature of the order and breach in question, and the extent of the breach.

(b) Whether the contempt was contumacious or unintentional, the reasons, motives and state of mind.

(c) Whether the claimant has been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy.

(d) Whether the contemnor appreciates the seriousness of the deliberate breach.

(e)  Whether the contemnor has cooperated.”

81.  In this case, Hon Au Yeung J continued to say that:

“The Court should examine the context in which the contempt had arisen, the effect of the breach on the Applicant, the aggravating factors, the mitigating factors and the personal circumstances of the respondent.”

82.  I have analysed above the context in which the contempt has arisen.  H has been in default over 3 ½ years. While H kept saying that he intends to pay when able, he proffered no plans on how he intends to do this.  He has not even made an attempt to purge his contempt since the Examination Hearing, nor come to the table for a discussion on the M’s settlement offers.

83.  W’s counsel also made submission in her closing as to H’s contradictions and inconsistencies with reference to his affidavit evidence, his answers to questionnaires, and his responses at the Examination Hearing.  There is no need to list these out in details at this point, except to say that these are accepted as they are all backed by evidence before the Court.

84.  The fact that he has chosen to pay his new wife and for her family USD3,000 instead of the amount owed on his monthly maintenance to A and his school fees is unacceptable.  He chose to believe that because M has the ability to support their son, that he can put on very low priority his financial responsibilities as a father and flout an Order of this Court; such conduct must not be endorsed.

85.  He has also failed miserably in his on-going duty for full and frank disclosure to this Court, his excuses in this failure are not accepted.

86.  W’s counsel submits that it is ironic that H thought not paying his AE and HSBC liabilities would cost him his licence.  I am of the view that he is fully aware of the consequence of his default under the 2018 Consent Order and these enforcement proceedings.  He appears to operate on the belief that there will be no consequences nor repercussions for his breaches.

87.  The H is hereby committed to prison for a term of three months. Upon payment of the whole of the judgment debt in the sum of $1,580,725.93, the Chief Bailiff or the Commissioner of Correctional Services, as the case may be, is directed to release the judgment debtor forthwith.

Costs

88.  W seeks costs on an indemnity basis.  The legal principles are trite, inter alia, the Court is entitled to look at the circumstances upon which these proceedings are taken out, conduct of the Respondent prior to and during these proceedings.

89.  W’s ask are based on the following:

a.  W has been forced to institute proceedings against H for his ongoing breach of the 2018 Consent Order.

b.  H has on-going failed to make any substantive payments towards the arrears or ongoing maintenance despite his income for over a year.

c.  H has delayed these proceedings by seeking a variation of maintenance application but failed to follow through, applying for legal aid one day before the examination hearing, refusing to accept service of committal summons and documents whereupon W has to seek dispensation from Court, opposing the AIO Summons 14 months after it was filed, seeking extension of time to file an affidavit on the pretext of gathering documents for disclosure but failing to produce them in the end.

d.  No genuine attempts to settle despite efforts by the W.

90.  I accept these points, and further take into regard the following conduct:

a.  H’s non-compliance of a Court Order.

b.  H’s continuous failure in full and frank disclosure.

c.  H’s decision in prioritizing payments for his new family, his credit card bills, his excessive expenses over paying for his son’s maintenance and education.

91.  I make an Order that the Costs of these proceedings be to the W, on an indemnity basis.  This to be a cost nisi to be made absolute 14 days hereof.

92.  The H's application for variation of maintenance dated 29 July 2021 shall be dismissed.