PD v. KWW

FCMC 11277 / 2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 11277 OF 2009

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BETWEEN

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J U D G M E N T

(AIO re Financial Undertakings and
Various Interlocutory Applications)

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INTRODUCTION

1.  Briefly, I will set out the background leading to the current summonses.

2.  The parties in these divorce proceedings married in February 2000 and according to the husband (“H”), they started living apart under the same roof some time in August 2007. H moved out of the matrimonial home in October 2007.  He issued his first divorce petition based on the wife’s unreasonable behavior in June 2008.  The petition was defended by the wife (“W”).  This was followed by both parties issuing applications for various forms of ancillary relief.  W also made an application for interim maintenance for herself and the child of the family, a daughter who is now 10 years old (“L”), and an order was made by Judge Melloy on 28 April 2009 (“Interim Maintenance Order”).  Custody of L was hotly contested and there was a 3 day trial in June 2009. On 29 June 2009, Judge Melloy ordered the parties to have joint custody of L, with W having L’s care and control and H having reasonable access including defined visiting and staying access.  W appealed to the Court of Appeal against the joint custody order.  The Court of Appeal subsequently upheld Judge Melloy’s order regarding the joint custody, care and control, and only allowed certain variation of the defined access terms.

3.  In the meantime, H issued a fresh divorce petition in September 2009 based on the parties’ separation for over two years since 5 August 2007 and a Decree Nisi was granted to him on 15 January 2010.  The Financial Dispute Resolution before Judge Melloy was unsuccessful, and the matter was then transferred to this Court for the ancillary relief trial, which is currently ongoing.

4.  For most part of the proceedings, the parties were unrepresented, although initially H and W had instructed solicitors briefly. Shortly before the commencement of the ancillary relief trial in early November this year, W decided to instruct solicitors to represent her for the initial 3 days fixed, but regrettably, the trial had to be adjourned part-heard.  W then decided to act in person again, claiming a lack of funds.

5.  W is Malaysian and is an in-flight services manager.  She is 51 years old.  H is Belgian and he is working as a sales director for a company in Hong Kong.  H is now 41 years old.  The parties are capable persons and they have now been representing themselves in litigation for some time, not only in the Family Court but also in the Court of Appeal.  I have therefore pointed out to them that they should not ignore all procedural rules, and choose to send letters and faxes to the Court whenever they feel like or write to the Court unilaterally, without leave of Court.  If they wish to make any application, they should do so by way of a summons, and properly file their evidence by way of affidavits.

6.  Before the ancillary relief trial was adjourned on 4 November 2010, H had completed his cross-examination of W, but W’s then solicitor Mr. Collins indicated that he would need to re-examine W.  Thus this Court adjourned the trial to 26 November 2010 for W to complete her oral evidence first before fixing further dates for H’s oral evidence.  However, before the trial re-commenced on 26 November 2010, there was a flurry of activities:

(i) W filed Notice to Act in Person on 17 November 2010.

(ii) W issued an ex-parte injunction in the late afternoon of Friday 19 November 2010 restraining H from selling or otherwise disposing of 4 Belgian properties, and for an order for H to maintain a bank balance of at least HK$30,000 in his Hong Kong bank account in order to pay the interim maintenance for W and their daughter L under the Interim Maintenance Order.

(iii) H applied for leave to issue a Writ of Subpoena on 24 November 2010.

(iv) H issued a summons on 24 November 2010 for W to disclose the details of a bank account of W’s son, R, from date of opening todate, such account being disclosed by W during cross-examination (“H’s Summons”).

(v) W issued an inter-partes summons on 24 November 2010, attaching a copy of her ex-parte summons (“W’s Summons”).

H’S SUMMONS

7.  I will deal with H’s Summons first.  This arose out of W’s evidence during the trial that she had transferred a large sum of money to her son, R, who was born out of W’s previous marriage.  W first gave evidence that it was an amount of HK$200,000, and later she said it was HK$300,000, and finally she reverted to HK$200,000.  According to W, this sum was transferred to R’s bank account, and the sum was for R’s use. W has not produced the statements of R’s bank account.  The present balance in R’s bank account is unclear. 

8.  According to W, R is currently attending university in Canada, and is still financially dependant on W.  R is now about 23 years old, and he is not a party in these proceedings.

9.  This Court has the power to order discovery of documents against a person who is not a party to the proceedings and who is likely to have or to have had in his possession, custody or power relevant documents.  However, such application must comply with Order 24 Rule 7A of the Rules of the High Court.  Under Rule 7A(2), the summons must be served on the non-party personally.  The supporting affidavit/ affirmation must contain the information set out in Rule 7A(3) and under Rule 7A (4), such supporting affidavit/affirmation must also be served on the non-party.

10.  H clearly has not complied with the relevant rules in relation to H’s Summons.  In the circumstances, I will order it be adjourned sine die with liberty to restore after proper service and compliance with rules.

W’S SUMMONS

11.  As far as I could make out, or understand, it appears that W is seeking 2 types of orders:

(i) Restraining H from selling or disposing of his interest in the 4 Belgian properties/avoidance of transactions order under s. 17 of Cap. 192

(ii) To maintain a bank balance of at least HK$30,000 per month in his Hong Kong bank account to pay the interim maintenance and L’s school fees/for an order for H to pay interim maintenance of HK$24,520 per month, plus accrued arrears todate of HK$284,260

Paragraph 11 (i) above

12.  So far as paragraph 11 (i) above is concerned, shortly before the ancillary relief trial was to commence, according to the Family Registry’s record, on 26 October 2010, W issued a summons for an order that the alleged sale/transfer of 3 of the 4 Belgian properties be set aside, although W’s own copy of the summons was dated 20 October 2010.  These 3 properties were allegedly sold by H respectively on 25 July 2009, 9 July 2010, and 12 July 2010.  H had produced the relevant sales deeds, but W’s case was that he sold/transferred these properties all at under value, and that these were not genuine transactions, and that H still retains interest in these 3 properties.  At that time, W was represented by Mr. Collins.  At the commencement of the trial, this Court drew Mr. Collins’s attention to the fact that a setting aside/s. 17 summons should be by way of a Form 8B Notice and should comply with Rule 74 of the Matrimonial Causes Rules (Cap. 179), and in particular, the application should be served on all the alleged purchasers. This was not done.  As pointed out by Mr. Collins, this Court could made any adverse inference against H in the event that H was found to have not to make full and frank disclosure or that his evidence in relation to the alleged sale of the 3 properties were not to be accepted by the Court.  No doubt to arrange for service on the purchasers/transferees outside jurisdiction would involve time and costs, and further the purchasers/transferees could decide to instruct their own legal representatives.  In order not to delay the trial and to save costs, Mr. Collins then sought leave to withdraw W’s then setting aside summons.  This was a sensible decision, and leave was duly granted.

13.  In the circumstance, I completely fail to understand why W’s Summons again referred to any setting aside/s.17 application.  I therefore propose to ignore this reference.

14.  The alleged sales of those 3 out of the 4 Belgian properties were all made after H’s issue of the divorce proceedings, and the first of these transactions took place about 3 months after the Interim Maintenance Order.  Often, if there are landed properties in Hong Kong which are subject of dispute, the claimant could register his/her claim in the Land Registry to prevent any transfer, and in case of any transfer after the claim has been registered, the intended transferee would have notice of the claim, and could take the title subject to such claim.  I am not sure whether the same procedure is available in Belgium, but there is no evidence that W has previously attempted to register her claims in any land office/registry in Belgium.

15.  At present, according to H, he only has interest in the 4^th property.  One of the key issues in these ancillary relief proceedings is whether the 4 Belgian properties and/or their sale proceeds form part of the parties’ “Matrimonial Property”, and whether H still retains any interest in the 3 properties allegedly sold by him. This Court has the jurisdiction to preserve assets, and although W has failed to apply for such restraining order earlier, I am of the view that there should be no further dealings in these 4 properties, unless with leave of Court. Thus, on the ex-parte application by W, I have made an order on 19 November 2010 that H should not sell or dispose any of his interest in the 4 properties, as from the date of order (“Ex-Parte Order”). 

16.  H seeks a discharge of the Ex-Parte Order.  I gave him leave on 24 November to file an opposing affirmation.  In his affirmation filed on 25 November, all H did was to attach a letter from a Deputy Judge in Belgium as to the conveyancing practice of landed properties in Belgium.  While this letter could be helpful in supporting his allegation that the sales of those 3 properties were genuine transactions, there were no grounds set out by him as to why this Court should not continue the Ex-Parte Order pending the final determination of all these issues in the trial.  In fact, H has said that he has no intention of selling the 4^th property, and it is his case that he no longer has any interest in the other 3 properties, and therefore he will not be able to deal with these 3 properties in any way.  Having balanced the parties’ interest, and the granting of the order will not be oppressive to H, I find it just and convenient to continue the Ex-Parte Order.  I therefore order the Ex-Parte Order shall continue until further order.

Paragraph 11 (ii) above

17.  As mentioned earlier, there was an interim maintenance application by W after H issued his first petition.  There was initially an “interim” interim order made by Judge Melloy on 25 February 2009 that H was to pay W interim maintenance of HK$5,000 per month for L, commencing from 1 March 2009.  Then followed a fuller contested hearing which resulted in the Interim Maintenance Order on 28 April 2009.  The Interim Maintenance Order states that pending a full hearing on ancillary relief:

Upon H’s undertaking to continue to pay for L’s school fees and homework tutor, and

Upon the H’s and the W’s undertaking to continue to provide L with medical insurance

(i) H to pay W HK$2,500 per month as maintenance pending suit for herself

(ii) H to pay W HK$15,000 per month as interim maintenance for L

(iii) The payments were to commence on 1 May 2009 and thereafter on the 1^st day of each succeeding month until further order

(iv) H to pay backdated maintenance to W from 1 December 2008 totalling a sum of HK$95,000 on or before 1 May 2009.

18.  As H failed to pay the sum of $95,000 on or before 1 May 2009, W applied for leave to issue a Judgment Summons for the unpaid sum of HK$95,000.  After W made her application for leave, and before she issued the Judgment Summons on 14 July 2009, H issued a summons on 12 June 2009 for suspension/reduction of the unpaid sum of HK$95,000 (“H’s Variation Summons”).  On 17 September 2009, both W’s Judgment Summons and H’s Variation Summons were adjourned to be dealt with until after the conclusion of W’s appeal.

19.  At the time of the hearing of the interim maintenance application, Judge Melloy did not go into the details of the parties’ respective capital assets and as she herself had indicated in her judgment on interim maintenance (“Melloy’s Judgment”), she was adopting a broad-brushed approach, mainly looking into the parties’ income and expenses.  When the ancillary relief matter came to this Court for a pre-trial review, this Court took the view that the issue whether H had/has the ability to pay HK$95,000 as a lump sum under the Interim Maintenance Order would be a matter which could only be determined after cross examination and a more detailed investigation into the parties’ assets.  In any event, this could be an amount to be taken into account in the division of the matrimonial assets.  Thus, at the pre-trial review, this Court had indicated that the matter of the unpaid sum of HK$95,000 would be dealt with together as the matter of final ancillary relief during the trial.  Further, to have a mini-trial over the H’s Variation Summons prior to the final ancillary relief trial will only further delay the trial, particularly in view of the already congested diary of this Court.  It was therefore more practical to deal with both H’s Variation Summons and the parties’ respective ancillary relief applications together.  As the Judgment Summons has to be dealt with in open court, I propose to deal with this after the determination of the ancillary relief applications and H’s Variation Summons.

20.  Both the Judgment Summons and H’s Variation Summons only deal with the sum of HK$95,000 of backdated maintenance.  At that time, H was complying with the rest of the Interim Maintenance Order.  Regrettably, this has changed.

21.  In W’s affidavit of 24 November 2010 filed in support of W’s Summons, she is alleging that

(i) H has not paid arrears of 19 months of “Interim” Interim Maintenance of HK$5,000 per month from October 2008 to April 2009, plus summons fee and transportation fee excluding interest is $96,180.

(ii) H has not paid the interim maintenance of HK$17,500 per month for 4 months from August to November 2010, as ordered by Judge Melloy under the Interim Maintenance Order. This totals HK$70,000

(iii) H only paid school fees only one time in the sum of HK$8,950, and the arrears is HK$118,080.

22.  At present, W has not applied for leave to enforce (ii) and (iii) of the above alleged arrears.  I am not sure how W came up with the figure of $96,180 under (i) above, since the “Interim” Interim Maintenance Order made by Judge Melloy was dated 25 February 2009, and the first payment under that Order was from 1 March 2009.  Under the Interim Maintenance Order, the maintenance was backdated to 1^st December 2008 only.  It is not clear whether W was referring to the same sum of HK$95,000 or not.  The payment of school fees by H was by way of an undertaking, and if H has not complied with his undertaking, W is entitled to apply for leave to issue a Judgment Summons, or contempt proceedings. 

23.  At the hearing on 26 November 2010, I asked H why he has not been complying with the Interim Maintenance Order of paying the HK$17,500 per month and L’s school fees since August 2010.  H referred this Court to a letter dated 6 September 2010 sent by him to the Court (Correspondence Bundle: 97) in which he asked for suspension of interim maintenance payments.

24.  In this letter, H claimed his salary from September to December was HK$143,000 per month, and included a bonus payment of $140,000 which he said was not guaranteed but payable in this month.  He claimed a tax liability of $245,000 which will be payable.  As pointed out by W, his tax bill was not due in August 2010, when he stopped paying.  Further, as pointed by W, if H was indeed in financial difficulties, he did not need to employ any domestic helper, as it seems that H chose to pay his helper and yet he has not paid any interim maintenance for his own daughter L from August this year onwards. 

25.  It seems that H has not formally issued any summons for complete suspension of the Interim Maintenance Order, whether for the monthly sum of $17,500 or his undertakings.  H’s Variation Summons only relates to the sum of HK$95,000.  It is clear from Judge Melloy’s Judgment in April 2009 that at that time on a broad brushed approach, she was of the view that H was able to pay the amounts ordered by her.  This was based on H’s then average income of about HK$167,000 per month (being his income in Hong Kong of HK$130,593 per month, plus his then rental income of HK$36,500 per month from the 3 now allegedly sold Belgian properties), and expenses of about $174,421 per month, as set out in his 1^st Form E dated 7 August 2008.  The expenses included a tax provision of $20,000 per month, and as L was then attending a Government local school, her school fees were minimal.  H was at that time willing to continue to pay for L’s school fees by way of undertaking.

26.  In H’s 2^nd Form E dated 26 April 2010, he stated his average income to be about $166,026 per month, and his then expenses about $209,630 per month, which included the interim maintenance of $17,500, L’s school fees of $1,000 per month, and a tax provision of $28,202.  In his 3^rd Form E dated 15 July 2010, he listed his average income to be HK$163,000 per month and his expenses to be about $185,271.13 per month, again including the interim maintenance of HK$17,500 per month, L’s school fees of $1,000 per month, and a tax provision of $28,202 as part of his monthly expenses.  Finally, notwithstanding his letter of 6 September 2010, in H’s latest 4^th Form E affirmed on 18 October 2010, he stated his total average income was HK$162,969 per month, and he listed his expenses to be $182,937 per month, including the interim maintenance of HK$17,500 per month, and a tax provision of $28,202 per month as part of his monthly expenses.  In this 4^th Form E, H did not include any amount for L’s school fees.

27.  If H wishes to seek a suspension of the Interim Maintenance Order, the burden of proof is on H to show any substantial/material change in his circumstances since the Interim Maintenance Order, in particular any substantial/material change in his income and his expenses.  H has remained in the same employment in Hong Kong, and his earned income has in fact gone up about 25% or about $32,376 per month since the Interim Maintenance Order, if one compares his 1^st Form E with his 4^th Form E.  According to his 1^st Form E, his monthly deficit would be almost $7,421.  His monthly expenses included his own personal expenses of almost $60,000 per month.  According to his 2^nd Form E, his monthly deficit would be about $43,604.  Apart from his rental, which had been increased by $6,000 per month, his personal expenses had gone up to $74,000 per month, i.e. an increase of $14,000 pm from his 1^st Form E, but this included an increase in his tax provision of about $7,260 per month and the interim maintenance of $17,500 per month.  At that time, he was still paying the interim maintenance of $17,500 per month.  According to his 3^rd Form E, in July this year his monthly deficit had reduced to be about $22,271, and at that time, H was still paying the interim maintenance of $17,500 per month.  By the time of his 4^th Form E in October, he had stopped paying for 2 months.  His monthly deficit was stated to be about $19,968. In both his 3^rd and 4^th Form Es, his general expenses remained to be about $100,000 per month, and his personal expenses remained to be about $74,000 per month.  I therefore could not see any material change between his 3^rd Form E and his 4^th Form E which would justify his suddenly stop paying any maintenance for L.

28.  W has asked that H be ordered to maintain a bank balance of at least $30,000 per month in his bank account.  I do not see how this would help her.  Even if H does have $30,000 balance in his bank account, it does not mean that he will comply with the Interim Maintenance Order.  I therefore decline to make the order sought by W, which in my view will be ineffective.  Instead, I propose to make an immediate attachment of income order in relation to the sum of HK$15,000 per month for the interim maintenance order for L.  I would have been also minded to make an attachment order in respect of the W’s interim maintenance order as well, but having read the definition of a “maintenance order” in section 2 of Matrimonial Proceedings and Property Ordinance (Cap. 192), this does not in fact cover a maintenance pending suit order made under s. 3 of Cap. 192.  I am therefore of the view that I do not have jurisdiction to make any attachment of income order in respect of the maintenance pending suit of $2,500 per month for W. 

29.  It could be argued that H’s undertaking to pay the L’s school fees and homework tutor is not a “maintenance order” which falls within the definition of this term in Cap. 192.  However, in the English case of Gandolfo v Gandolfo and Another [1981] 1 Q.B. 359, it was held that in an appropriate case an undertaking given to the court could be treated as being equivalent to an order of the courts, and in that case, it was held that the husband’s breach of his undertaking to pay school fees was enforceable by garnishee proceedings.  This was also followed in the English case of Symmons v Symmons [1993] 1 FLR 317 where it was held that the husband’s breach of his undertaking to pay school fees and school clothes was enforceable by way of judgment summons.  In both these cases, a financial undertaking was held to be an “order” for the purpose of enforcement proceedings.

30.  There is, however, another issue regarding H’s undertaking. From the letter dated 2 November 2009 from the CAIS produced in W’s affidavit of 24 November 2010, it appears that H had informed the school that he refused to pay the school fees as there was no specific court order.

31.  At the time of the Interim Maintenance Order, L was only attending a Government school with minimum school fees, it is clear from paragraph 22 of Judge Melloy’s Judgment dated 29 June 2009 on custody that H did eventually agree for L to start attending her present school in autumn of 2009.  Thus it seems that H’s undertaking under the Interim Maintenance Order should cover L’s present school fees, but I am not able to find any confirmation of this among the documents filed by the parties.  It also seems that H did pay a sum of $8,950, but it is not clear as to whether he paid directly to CAIS or not.  W seems to have been paying all L’s school fees amounting to $118,080 since 27 August 2009, and yet there have not been any formal enforcement proceedings issued by her although she did complain to Judge Melloy before the FDR.

32.  An undertaking is normally provided on a voluntary basis.  Obviously, if H now wants to withdraw or vary his undertaking, he would need to make a formal application, and the Court has the power to vary and to increase the amounts in the Interim Maintenance Order to include an element for school fees in the interim maintenance for L.  Further, if H is eventually found to have been in breach of his undertakings, then he may be held to be in contempt, and this Court is unlikely to accept any further undertakings from him.  Having said all this, it appears to me the most practical route would be to deal with H’s alleged breach of his undertakings during the trial, rather than have another mini-trial now.  I have on 24 November 2010 made an order that all monies held in the W’s account with the Anglo Irish Bank be transferred and paid into Court.  Upon receipt, I will be prepared to consider an application for L’s school fees to be paid out of this sum, and this will be taken into account in the final determination of ancillary relief.  I am therefore not prepared at this stage to make any attachment of income order in respect of the payment of school fees even if I have the power to do so.

33.  I have the power to make an immediate attachment order under s. 28 of Cap. 192 if I am satisfied that the payer has without reasonable excuse failed to make any payment which he is required to make by the maintenance order; or I am satisfied that there are reasonable grounds to believe that the payer will not make full and punctual payment in compliance with the maintenance order, and there is any income capable of being attached payable to the payer. Under s. 28 (2B), the court may make such an order of its own motion and further under Rule 3 of the Attachment of Income Order Rules (Cap. 13A), I have the power to dispense with any procedure specified in rules 3 to 8 if I am satisfied that it is fair and reasonable to do so in the circumstances of the case.  As H has already filed 4 Form Es stating his income and expenses I will dispense with Rule 3C and any applicable rules.

34.  Having taken into account all the circumstances of the case, including H’s failure to make any payments at all for L under the Interim Maintenance Order since August 2010, and the risk of H dissipating his property, having allegedly sold 3 out of his 4 properties soon after the Interim Maintenance Order, I am of the view that there are reasonable grounds under s. 28 (1A) of Cap. 192 for me to make an attachment of income order in respect of the interim maintenance order for L of HK$15,000 per month with effect from the date of the next payment of H’s salary in December 2010.

35.  So far as costs of W’s Summons, I will order that such costs be reserved.

ORDER

36.  My order is as follows:

(i)    The Petitioner’s summons issued on 24 November 2010 is adjourned sine die with liberty to restore.

(ii)    Paragraph 1 of the Ex-Parte Order dated 19 November 2010 do continue until further order.

(iii)    There be an attachment of income order in respect of the Petitioner’s salary from his employers for the sum of HK$15,000 per month, with effect from the next salary payment date in December 2010, and the amount of HK$15,000 per month shall be paid into Respondent’s HSBC savings bank account. (The details of the name and address of the Petitioner’s employers and the Respondent’s savings bank account number will be set out in the order to be drawn up).

(iv)    Costs be reserved.