EMWW nee EMWT v. SKKW

FCMC 9631 /1998

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 9631 OF 1998

----------------------------

-----------------------------------

J U D G M E N T

(Variation of maintenance)

-----------------------------------

Introduction

1.  This is an application by a respondent husband to decrease the periodical payments paid to the wife for the child of the family as follows:

1. To cease the annual increase of the maintenance by 8% and to set down the maintenance at HK$61,222 per month starting in January 2003.

2. To reduce the maintenance from $61,222 per month to $31,222 per month starting in (alteration) March 2009.

3. To reduce the maintenance from $31,222 per month to $16,000 per month starting in March 2012.

4. To cease the payment of maintenance per month starting in September.

2.  This is in keeping with what he says actually happened. The husband says that the wife agreed to these reductions in payment. He also says that he paid additional sums far in excess of the original court order to cover things like the son’s school fees and other extracurricular activities. The wife for her part has issued a judgment summons and an application for leave to enforce arrears of maintenance going back to 2008. 

3.  As will be seen in accordance with the original order the husband agreed to pay the wife HK$45,000 per month as maintenance for the child. This sum was to be increased each year by at least 8%. Thus on the wife’s case the maintenance should have been increased incrementally each year. On the wife’s calculation by the time the son reached the age of 21 the husband should have been paying her the equivalent of HK$132,172 per month. She now seeks to recover those sums that she says should have been paid to her historically and to use them in order to relocate back to Canada, where she claims that she and the son could have a better life.

Background

4.  The parties married in September 1990 and on the 3 September 1998 the wife issued a divorce petition based on the husband’s adultery. There is one child of the family, a boy who was born in February 1991 and is now nearly 23 years of age. Unfortunately the son had some learning difficulties, but nevertheless was able to attend a mainstream school. The parties were able to come to terms in relation to all matters and on the 12 February 1999 an order was made by consent in relation to the arrangements for the son and ancillary relief. The order stated that the husband will undertake inter alia to

4. Pay all the costs for the child spending a holiday at such place or places outside Hong Kong as the Petitioner sees fit once a year such costs shall include but not limited to return economy air-tickets, hotel accommodation, food and entertainment and sight-seeing expenses;

5. To be solely responsible for the travelling expenses to and from Shanghai by the child and the person, if any, who escorts the child to and from Shanghai and their accommodation in Shanghai in the event that the Respondent shall require the child to go to Shanghai for the purpose of exercising his access to the child; and

6. continue to pay the premium payable under a Life Insurance Policy No. UXXXXXXX with East Asia Aetna Insurance Company Limited (“the policy”) and will not cause or allow the policy to lapse for whatsoever reasons and that the Respondent will not make any amendments in respect of the beneficiary of the policy so that the child shall remain to be the only beneficiary under the policy.

AND UPON the Respondent’s further undertaking to the court and to the Petitioner that in the event that the Petitioner shall choose to take care of the child full time, which discretion shall be exercised by the Petitioner unfettered, the Respondent shall pay such sums as the Petitioner may reasonably require for her maintenance during their joint lives or until the date of remarriage of the petitioner whichever is the later.

Further it is ordered inter alia that:                                                 

1. The Respondent shall pay to the Petitioner for her sole benefit a lump sum of HONG KONG DOLLARS EIGHT HUNDRED THOUSAND (HK$800,000.00), to be paid by two instalments as follows :-

(a) A sum of HK$500,000.00 to be paid on 1^st September 1998 (receipt is acknowledged); and

(b) A sum of HK$300,000.00 to be paid on or before 1^st January 1999 (receipt is acknowledged).

2. The Respondent shall pay to the Petitioner nominal maintenance of HK$1.00 per annum.

3. …

4. The Respondent shall pay to the Petitioner periodical payment of HK$45,000.00 (Hong Kong Dollars Forty Five Thousand) per month for the maintenance of the child until he attains the age of 21 or finishes his full-time education up to first degree level whichever is the later provided that in the event that the child shall be certified by a medical doctor to be unable to look after himself independently after he attains the age of 21, the maintenance shall continue beyond his age of 21 until he is certified to be able to look after himself.  The said payments shall commence from the 1^st day of May 1998 and thereafter on the 1^st day of each succeeding month.  The periodical payment to the child shall be increased on 1^st January 1999 and thereafter annually on the 1^st day of each year at the same rate of increase as the Hong Kong Hang Seng Consumer Price Index for the last year but in any event not less than 8%.

The law 

5.  The husband’s application to vary is made pursuant to section 11 (7) of the Matrimonial Proceedings and Property Ordinance Cap. 192, which provides that:

“(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 ……”

6.  It is accepted that in considering a change of circumstances, I may look at the case de novo. In other words the court is not necessarily fettered by the existence of a previous order. I may look at the situation afresh and make an order based on the parties’ existing financial circumstances. (See Ch 3.131 Jackson’s Matrimonial Finance and Taxation, 7^th edition). It is also true that there would normally be a reason for the application to vary or what some might call a “trigger”.

7.  The court has a very wide power, including a power to terminate payments and to backdate the variation ordered. The overall objective is to achieve a fair outcome (see M v M, FCMC 4070 of 1990, dated 12 May 2006, unreported).

The issues

8.  There are several issues to be determined as follows:

Should maintenance for the son be paid beyond the age of 21 years?

Should the court accept the wife’s argument that notionally the son’s maintenance should have been increased by at least 8% per annum?

Alternatively should the court adopt the levels of maintenance as put forward by the husband in his Notice of Application?

Background

9.  The wife is 54 years old and she is employed as an insurance agent. Her income is variable and according to her Form E she is currently earning HK$6,000 per month. She says that she is paid on a commission only basis. She also says that she and the son live with the maternal grandmother, who is in poor health, in a property on Hong Kong Island, but that they are unlikely to be able to remain there once her mother passes away. She wishes to return to Canada where she believes that there will be more opportunities for the son.  

10.  The husband is 56 years old and he has retired. He has also remarried and he spends most of his time with his second wife in Shanghai. He says, although this is disputed by the wife, that he has no income and that his assets are limited.

Should maintenance for the son be paid beyond the age of 21 years?

11.  Although the wife complains that the husband unilaterally stopped payment of the maintenance it does not seem to be seriously disputed that he was within his rights to stop making payments in September 2012. The son was by that stage over the age of 21 years; he had completed a course of study and had started working in a hotel. It should be noted that the wife did not produce a medical certificate to certify that the son was unable to look after himself as was provided for under the terms of the original court order. However she did attach a statement from her domestic helper to her closing submission where that same basic point is made. The domestic helper did not file an affidavit and she was not called as a witness. The husband had no opportunity to challenge what she said in that statement. Consequently I do not intend to attach any weight to it.

12.  For the avoidance of doubt it seems to me that the husband was entitled to stop payment in September 2012 and this judgment will proceed on that premise.

Should the court accept the wife’s argument that notionally the son’s maintenance should have been increased by at least 8% per annum?

Alternatively should the court adopt the levels of maintenance as put forward by the husband in his Notice of Application?

13.  It is true that under the terms of the original court order the maintenance for the son was to be increased by at least 8% per annum. Thus on the face of it I would accept the calculations put forward by the wife in her closing. The difficulty however is that maintenance sums are supposed to contribute towards the child’s expenditure – which may include a contribution towards the general household expenses, as well as the child’s actual expenses. This will generally include school fees, extracurricular activities etc. The difficulty however is that there was no assessment of the suitable level of maintenance to be paid for the son at any stage. Neither party made an application to the court to vary the maintenance payments or to enforce the arrears. Further at the time of the original court order given that agreement was reached, neither party filed a Form E setting out their financial circumstances or the needs of the son.

14.  When seeking leave to enforce arrears of maintenance that are over 12 months old, the wife will also need to show that she had not acquiesced to the reductions proposed by the husband. The court will not enforce arrears that are very old where the other side had been under the impression that the variation had been accepted.

15.  Further maintenance payments are always capable of variation if circumstances change. Thus if I accept that in any event the husband was unable to pay the sums as calculated by the wife, then those sums can be varied and any variation can be backdated.       

16.  The difficulty originally with the wife’s case is that it was clear from the evidence that the parties had been in constant contact over the years with respect to their finances and that although the maintenance levels had been set at HK$61,222 per month by the husband in 2003, in reality he had paid a great deal of additional money on top of this sum, for things like school fees etc. The wife says, and she is correct in this, that her agreement to the freeze the incremental rise in maintenance payments was conditional – in other words she reserved her right to claim back any balance in the future. However the fact remains that she did not do so – until after the son had reached the age of 21 years. She also did not give any credit initially to the additional sums paid by the husband over the years, at her request allegedly for the son’s maintenance.

17.  The husband maintains and I accept what he says in this respect, that he always supported his son to the best of his ability and that he often contributed funds in excess of those stipulated in the court order. He says that any reduction or alteration in payment structure was by agreement with the wife.

18.  From the evidence produced it is clear that in 2007 the husband paid the wife a great deal of money in addition to the HK$61,222 per month. I was a little perturbed that these extra sums were far in excess, for example, of the ESF school fees payable at the time. During the trial the husband confirmed that he did not ask to see invoices for school fees or other expenses. The wife now acknowledges that in 2007 the husband paid HK$542,450 in addition to HK$61,222 per month – or HK$734,644 for the year. Even then on the wife’s own case and based on a regular notional 8% annual increment, which would have meant that the husband should have been paying HK$89,854 per month or HK1,078,248 for the year 2007, the husband had over paid the wife. He actually paid her HK$1,277,114. Thus, even on the wife’s own case there was an over payment of nearly HK$200,000.

19.  The husband says that in reality there were also other payments. He says that the wife used his credit cards and that utility and other expenses continued to be paid by him. Again this is not seriously disputed by the wife. She simply says that the husband had the means to put a stop to such payments but that he chose not to do so. The difficulty at this stage is in assessing the quantum of those additional payments.

20.  In 2008 there was a similar story. Based on an increased maintenance level of HK$97,150 per month, even on the wife’s own case the husband had over paid by approximately HK$120,000 for the year. However from 2009 this began to even out. In part this was because by that stage under the terms of the original order the husband was supposed to be paying HK$104,922 per month for the son rising to an incredible HK$132,172 per month in 2012. On the face of it these sums are simply excessive. I do not accept that maintenance of such large sums is either fair or reasonable.

21.  The difficulty however is in determining what might have been an appropriate level of maintenance at the time – given that there is no evidence filed in that respect. Nevertheless I do not accept that the level of maintenance as calculated by the wife should now be enforceable as arrears in maintenance.

22.  On the husband’s case the wife agreed to the reductions and in the alternative he says that he had good reasons to seek a reduction in any event.  

23.  The husband said that he requested reductions in payment when his financial situation altered as follows:

a) January 2003 – he asked to stop the annual increment of 8% as there was an economic recession and his company began to freeze and cut salaries. Thus he asked that the maintenance be maintained at HK$61,222 per month. The husband was able to produce an e-mail from the wife dated the 31 March 2008 where she acknowledged her agreement to this, but on the premise that she could request the increment when she saw fit and that she was also entitled to ask for all back payments.

b) December 2007 – the husband says that he was laid off and he has not worked since. He then asked to reduce the maintenance to HK$31,222 per month. Even though he was unemployed this revised payment did not commence, on his case, until March 2009. This is disputed by the wife who says that the reduction took effect from April 2008. The wife also says that the husband will have received a large redundancy payment. This seems to have been accepted in part by the husband – although he also claims to have subsequently lost that money. I accept that this is credible given the turbulence in the financial markets over the last decade. The wife also claims that the husband has an earning capacity.

c) March 2012 – the husband reduced the payment from HK$31,222 per month to HK$16,000 per month.

24.  Although the husband has not been able to produce any evidence in support of what he says in relation to his redundancy and subsequent lack of employment, I accept that this is difficult given that he was allegedly laid off over 6 years ago. The wife questions his lack of financial transparency. I accept that this is a valid criticism. However I also accept, on balance, that the husband has probably not worked in a serious capacity since December 2007. I also accept that he probably has some financial resources at his disposal including the properties referred to during the hearing, but not disclosed earlier. It should be noted however that the wife does not have any serious claim against those assets.

25.  Having taken all of these factors into account it seems to me that there should be a variation of the maintenance order as requested by the husband. Any sums of money said to be outstanding shall for the avoidance of doubt be remitted.  

26.  In conclusion I will make an order in the following terms:

1) For the avoidance of doubt order 4 of the court order dated the 12 February 1999 shall be discharged with effect from the 1 September 2012.

2) There shall be an order in terms of the husband’s Notice of Application dated the 11 March 2013.

3) For the avoidance of doubt any sums of money said to be outstanding shall be remitted.

4) There shall be an order nisi to be made absolute in 14 days time that there be no order as to costs.