MALCOLM ERNEST GRAY v. DIANE CARY BARBER SERVINO

FACV No. 8 of 2001

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 8 OF 2001 (CIVIL)

(ON APPEAL FROM CACV NO. 121 OF 2000)

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J U D G M E N T

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Mr Justice Bokhary PJ:

1. I agree with the judgment of Mr Justice Nazareth NPJ.

Mr Justice Chan PJ:

2. I agree with the judgment of Mr Justice Nazareth NPJ.

Mr Justice Ribeiro PJ:

3. I agree with the judgment of Mr Justice Nazareth NPJ.

Mr Justice Nazareth NPJ :

Introduction

4. This appeal arises from one of the parties to matrimonial proceedings seeking to set aside a consent order providing for ancillary relief. Also challenged is a committal order enforcing monthly payments of the arrears of instalments of a lump sum award and of maintenance of a child.

The facts

5. The parties were married in February 1983. The only child of this union, James, was born on 12 June 1984. On the marriage breaking down, the respondent ("the wife") left Hong Kong with James in 1990. In December 1991 the appellant ("the husband") presented a petition for divorce. A decree nisi was granted by Deputy Judge Gill on 30 March 1993 followed by a consent order on 14 October 1993 ("the consent order") providing for ancillary relief. The consent order gave effect to an agreement the parties had reached. The consent order provided inter alia for the payment by the husband to the wife of a lump sum of US$374,000 by monthly instalments over a 7-year period from October 1993 to December 2000. It also provided for the payment by the husband to the wife of periodical payments for the benefit of James of US$2,000 per month to be increased annually by the percentage by which the husband's total salary increased.

The parties' applications

6. After some years the husband's payments fell into arrears which by November 1998 totalled some US$45,595. In December 1998 the wife applied for enforcement of the consent order by judgment summons. In May 1999 the wife took out a further summons, this time to set aside the husband's disposition of an interest in a property the husband owned in the United States at Hilton Head. The consent order required the husband to transfer his interest in the property to the wife on his retirement, relocation out of Hong Kong, or receipt of all his pension. It also required him on receipt of his pension to pay off the ￡150,000 loan on the Hilton Head property and a US$50,000 loan in respect of the initial payment of that amount of the lump sum payments. However, he secured the advance payment of his entire pension amounting to ￡470,000, and without notifying the wife, transferred his interest in the Hilton Head property to his new wife ("Marianne") for the sum of US$5. The wife saw little of the ￡470,000 some of which was used to discharge loans raised by the husband, including that for the Hilton Head property and that for the purchase of a plot of land in Malaysia, which he then mortgaged for the sum of HK$1.2 million to set up Marianne's own business.

7. About the same time as the wife took out her further summons in May 1999, the husband applied by summons to vary the consent order. He did not apply to set aside the consent order.

Deputy Judge Geiser's judgment

8. The applications came before Deputy Judge Geiser. The wife's application to set aside the disposition of the husband's interest in the Hilton Head property was adjourned upon application by Marianne.

9. On the other two applications following 4½ days of hearings, the Deputy Judge found for the wife. He dismissed the husband's application for variation of the consent order. He also dismissed the husband's submission that he consented to the ancillary relief order under duress. He held the husband to be in contempt of the consent order and made a committal order imposing a sentence of 6 months imprisonment, suspended on the condition that the husband paid off the amount then in arrears arising under the judgment summons at the rate of US$500 per month, together with current maintenance payments.

The appeal

10. The husband appealed to the Court of Appeal. His appeal was heard on 23 November and 22 December 2000. By its judgment handed down on 23 January 2001, the Court (Rogers VP, Keith and Le Pichon JJA) dismissed the appeal, and reinforced the payment of the arrears by an attachment of earnings order. With leave to appeal granted by the Court of Appeal the husband is before this Court. He now seeks the setting aside of the consent order in the alternative to variation of it. He also challenges the committal order complaining that the sentence of 6 months imprisonment is unwarranted. He relies upon numerous grounds.

11. It should be mentioned at this point that the husband was legally represented before Deputy Judge Geiser (including the time during which the agreement underlying the consent order was negotiated) and on the first day of the hearing in the Court of Appeal. While he has since had to cope with his appeal himself, he is plainly very intelligent as Deputy Judge Geiser observed. In the course of the protracted proceedings below, he has acquired an impressive awareness of how to present his case both factual and legal. He has done so with ability and restraint. The grounds he relies upon in challenging the consent order and its provisions, are remarkably consistent, going right back to his affidavit in support of his application for variation of the consent order made to the Family Court, and to his more recent written submission to the Court of Appeal, and in this Court, his case and supplemental case. All of those are lengthy and detailed documents.

Duress

12. The ground relied upon by the husband in attacking the consent order was duress. The wife, he says, put him under additional pressure in numerous ways when he was already under great financial stress in coping with all the expenditure in respect of both his former and new families. His health was seriously affected. His wife exploited the then stateless status of Sebastian, his only child from Marianne, which compounded Marianne's vulnerability. At the time she was in Hong Kong on a visitor's visa. Moreover, his wife seriously delayed the legal proceedings and associated matters causing high legal fees to be incurred. She refused him access to James. He feared she would harm James. She falsely claimed that he had had sexual relations with her during her visit in June 1992, which she further falsely alleged resulted in the birth of a child (Laura). Moreover, she threatened to disclose those matters to his new wife. She threatened and attempted to have him murdered. She also did not disclose all her accounts. She failed to disclose her cohabitation and remarriage. Generally, she conducted a sustained campaign of harassment. Altogether this, he says, produced a situation of gross disparity of bargaining power.

13. On behalf of the wife it was contended that the consent order was made after negotiations between the parties with each having the benefit of independent legal advice. Therefore, the husband should be held to the agreement. As to the US$2,000 due monthly for James' maintenance, she maintained that this monthly sum was in fact suggested by the husband himself.

14. Deputy Judge Geiser having considered all the evidence both written and oral, the latter given over a 41/2-day hearing, found nothing that would make the parties' agreement voidable on the ground of duress. The Court of Appeal found no grounds for disturbing the judge's findings in that respect.

15. It is plain that the husband must have been under considerable pressure from his financial difficulties. But there is no reason to doubt what Deputy Judge Geiser said in this regard, that the husband had "over-extended himself financially and to a large extent mis-managed his financial affairs ... Nevertheless the fact that he has so mis-managed his affairs cannot, in my judgment, be attributable in any way at all to the [wife]". It may be added that while the terms of the consent order might in hindsight appear to be generous, they do not strike one as so generous or indeed unjust as to suggest duress nor is there evidence pointing to the parties' agreement having been the result of exploitation of disparity in bargaining power. The Court of Appeal was plainly right in finding that there were no grounds for disturbing the judge's conclusions in that respect.

Variation of the consent order

16. The husband in his submissions sought a general reduction in the periodical payments on the ground of a material change of circumstances. Specifically in regard to the instalment payments of the lump sum, he sought a variation to enable them to be paid or set off partly from the rent received by the wife from the Hilton Head property. But under the consent order that property was to provide accommodation for the wife and James, prior to its transfer to the wife.

17. In his judgment, Deputy Judge Geiser said this:

"... It was the [husband's case] in this application that he cannot afford to be bound by the terms of the consent order. The reason for this is clear from his affirmation to be his responsibilities to his new family to whom he undoubtedly does owe a duty."

That remains the core of the husband's case. In addition, pointing to the requirement in ss 11(7) and 15(2) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (corresponding to that in s.31(7) of the Matrimonial Causes Act 1973) for regard to be had by the court to all the circumstances of the case, he relies on numerous other matters including in particular the conduct of the wife which is the subject of many complaints. The needs, as he sees them, of his new family and the relative affluence, in his eyes, of the wife and James, are a major feature of his submissions. It is not necessary to adumbrate the details of expenditure, assets and income of the husband's new family on the one hand and that of the wife and James on the other, that he has produced. There is, in that respect, little of their general nature that he would not have foreseen, or that Deputy Judge Geiser would not have been apprised of given the husband's detailed affidavit in support of his application for variation. Most of his expenditure, as would have been expected, was upon his new family.

18. The husband complains that the judge did not consider his application for variation de novo. But the judge expressly accepted the submission of counsel for the husband that the matter had to be considered de novo. Consideration de novo does not mean that the consent order and the agreement it embodied had to be disregarded, as the husband appears to think. The husband complains that the needs of his new family were not balanced by the judge against those of the wife and James. They plainly were, but rightly in the context of all the circumstances, including the consent order. Far from having been overlooked by Deputy Judge Geiser, the extent of many items of such expenditure, including the amount set aside for education, was detailed in his judgment. The husband complains that the Deputy Judge failed to adopt the proper procedure in "treating" the two applications, i.e. the wife's judgment summons and the husband's application to vary, together and not hearing his application first. The judge was entitled to do so, and in my view, sensible in doing so. Inevitably, he would and should have known the evidence and submissions upon each before he came to his decisions. The husband did not suffer any real prejudice. The husband also complains that the judge refused to hear the evidence of a witness who was made available. But the husband has not procured any record of his application, or of the judge's ruling; in short he has not provided any basis upon which this Court could intervene in the matter.

19. It is readily apparent, as Rogers VP observed in his judgment, that

"The difficulties in which [the husband] has found himself undoubtedly stem from his overspending. That overspending may well have stemmed from a benevolence towards his new wife and her family. His reticence in explaining his own financial affairs to her has contributed to his predicament."

Plainly, there are no material changes and certainly none that would warrant this Court's interference with the conclusions and orders of the Family Court and the Court of Appeal. Not only were the difficulties in which the husband found himself foreseeable and foreseen, but they resulted from his own actions. To echo the words of Willmer LJ in Ratcliffe v Ratcliffe [1962] 1 WLR 1455, a husband cannot be heard to say that a change in the circumstances which he has unilaterally and voluntarily induced renders the agreement so unjust to him that it ought to be altered. Any other view would involve, in effect, construing the relevant statutory provisions as a charter for "defaulting husbands", at pp 1460 and 1461.

The judgment summons

20. That part of the order made by Deputy Judge Geiser on the judgment summons that is relevant to the husband's complaint about the suspended sentence of 6 months imprisonment, was in the following terms:

"4(a) That the Judgment Debtor be committed to prison for the period of six months suspended provided the Judgment Debtor pay the Judgment debts of US$45,595.00 together with arrears maintenance for James as follows:

(i) US$500.00 per month in respect of the Judgment Debt.

(ii) US$2,412.00 per month in respect of current maintenance for James (subject to an annual percentage increase equal to the Petitioner's [the husband's] percentage increase in total salary).

4(b) That the order in 4(a) shall remain in force until such time as the judgment debt shall have been paid.

5 A warrant of committal be issued upon the Solicitors for the Judgment Creditor filing an affidavit of non-compliance with the terms of the suspension."

21. In the circumstances concerned, particularly the judgment debt specified, it is for the following reasons not necessary to go into the husband's submissions against the suspended sentence of imprisonment for six months. The Court of Appeal reinforced the payment of the arrears and current maintenance for James by making an attachment of income order. The order required the employer to deduct from his salary and to transmit to the wife "the sum of HK$22,700.00 per month until such time as the judgment debt calculated as at the equivalent of HK$355,428.00 shall have been paid by attributing the sum of HK$3,898 out of the monthly payments of HK$22,700.00 as being paid in discharge of such debt". In making that order, the court rightly observed that it would be a protection for the husband against his own proven inability to manage his affairs and thus prevent the committal order being put into effect. It also has the effect, in practical terms, of rendering the committal order unnecessary in respect of the judgment debt specified, since it would ensure payment while the husband remains in employment; and if he were to cease to be employed, committal is likely to be inappropriate. Committal orders are remedies of last resort; in family cases they should be the very last resort: see Ansah v Ansah [1977] 2 All ER 638, 643. Finally, the length of the sentence, i.e. 6 months, does seem to be unduly severe, as the husband complained. In that regard, the maximum term provided for under corresponding English legislation is 6 weeks. Accordingly, I would delete paragraphs 4 and 5 from the order.

22. It remains to note that the effect of paragraph 5 seems to be that a warrant of committal would be automatically issued upon the filing of an affidavit of non-compliance. It cannot be right that a judgment debtor in default should be simply deprived of his liberty and subjected to a term of imprisonment in that way. There might by that time be good reason why he should not be imprisoned. To take examples that are entirely conceivable even in the present case, the judgment debtor may have made payment that was not received or otherwise dispute the allegation of non-payment, or his health may make incarceration unreasonable or hazardous. The proper course would be at least for a judge of the Family Court to assess the propriety of and to sanction the warrant. This could be achieved by requiring the warrant to be obtained by judgment summons; but the matter would not end there. Suffice it to say that the considerations in point were touched upon in Mubarak v Mubarak [2001] 1 FLR 698. It would be prudent for those concerned with prescribing and carrying into effect the procedures which might result in deprivation of liberty in the circumstances discussed, to have them carefully examined.

Conclusion

23. In the result I would dismiss the husband's appeal save as to the committal order which I would allow to the extent of deleting paragraphs 4 and 5.

Costs

24. As to costs, the wife was awarded all her costs in the Family Court and the Court of Appeal. The only matter upon which the husband has succeeded in his appeal is the deletion from the order made on the judgment summons, of the provision for a suspended sentence of six months imprisonment. This could not have accounted for more than a fifth of the overall costs of the entire proceedings in this Court and below. I would accordingly make an order nisi giving the wife eighty per cent of her costs of the appeal, and leave the costs orders below undisturbed. Such order nisi would become absolute within 21 days if no written application for some other order as to costs is made within that time.

Sir Gerard Brennan NPJ:

25. I agree with the judgment of Mr Justice Nazareth NPJ.

Mr Justice Bokhary PJ:

26. The Court unanimously dismisses the husband's appeal save as to the committal order in respect of which the appeal is allowed to the extent of deleting paragraphs 4 and 5. As to costs, the Court unanimously makes the order nisi set out at the end of the judgment of Mr Justice Nazareth NPJ.