CSL v. WWK

CACV 278/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 278 OF 2003

(ON APPEAL FROM FCMC 1911 OF 1991)

________________________

J U D G M E N T

________________________

Hon. Cheung J.A. :

The appeal

1. This is an appeal by the petitioner against the decision of Deputy Judge D'Almada Remedios.

The background

2. The petitioner was married to the respondent on 10 September 1984. They were divorced on 22 October 1991. There were two children of the marriage, a daughter born on 7 July 1985 and a son born on 11 March 1989.

3. After the divorce the respondent has since remarried. He has two children from this marriage, born in 1993 and 1995 respectively.

The maintenance order

4. On 4 September 1991 a consent order ("the first order") was agreed to by the parties concerning the financial provisions for the petitioner and the children of the marriage. The respondent was ordered to pay the petitioner HK$1,500 per month as maintenance for herself and HK$750 per month as maintenance for each of the two children.

5. The monthly maintenance was to commence (retrospectively) on 1 March 1991 and thereafter on the first day of each succeeding month. There was provision for an annual increase of the maintenance and additional payments for Chinese New Year.

6. After June 1992, no payment was made by the respondent and by a further order dated 10 September 1993 ("the second order") the respondent agreed to repay the arrears of maintenance then due of HK$37,288 together with the costs of the application, totalling $41,288 by instalments of $800 each. The payments were to commence on 15 September 1993. The husband was obviously further required to continue with the maintenance payment under the first order, which was not disturbed by the second order.

The petitioner went to Canada

7. The petitioner emigrated to Canada with the two children in 1997. She obtained the permission of the court to take the children outside Hong Kong. She stayed in Canada until April 2001. She then returned to Hong Kong. Apart from a very short period of a few months, the two children had continued to live in Canada.

8. During the times when the petitioner was in Hong Kong after her return, she lived in a property owned by her father. Her father had since passed away.

The applications

9. On 13 May 2002 the petitioner issued a judgment summons seeking arrears of maintenance from 1 March 1991 onwards. By the time the summons came before the judge in 2003, that was a period of 12 years and the sum claimed was approximately $670,000.

10. The judge ruled that the petitioner could not claim the arrears of maintenance beyond a twelve-months period ending May 2002. The arrears of maintenance from 13 May 2001 to the date of the judgment on 18 July 2003 was HK$176,803. The judge ordered this sum to be paid from the pension of the respondent which he would receive on his retirement from his present employment with China Light and Power Company Limited ("China Light and Power"). The pension will be about HK$1,000,000. By the respondent's own calculation, the pension (which is under the MPF) is about HK$1,200,000.

11. The petitioner also applied to attach any maintenance payment to her against the respondent's income directly.

12. The respondent himself applied for a variation of the first order so that he would not be required to pay any maintenance at all as from July 1993, and for a variation of the second order to the extent that all arrears ceased in June 1997.

13. The judge ordered the respondent to pay HK$1,700 per month to each of the two children of the family until they reach 18 years of age or upon cessation of their full-time education, whichever is the later. The first payment was to commence on 1 August 2003. The payment is to come directly from the income of the respondent.

14. The judge also ordered the respondent to pay the petitioner a lump sum of HK$30,000 within one month, and upon payment of the arrears of the maintenance due for the period from May 2001 to July 2003 in the sum of HK$176,803, the periodical payments to the petitioner be dismissed. In the interim, the periodical payment payable by the respondent to the petitioner was to be varied to $1 per annum.

15. The petitioner now appeals against these orders.

The petitioner's position

16. The petitioner is now 48 years of age. After the marriage, she stayed at home as a housewife. In 1989 she also did some part-time work to supplement the income of the family.

17. After the divorce, she realized that she has to depend on herself. She was a form 5 graduate. She took up evening courses and managed to secure employment with Cathay Pacific Airlines, ultimately as a secretary. She was successful in applying for immigration to Canada in her capacity as a secretary.

18. She was employed full-time when she was in Canada. After her return to Hong Kong in 2001 she was only able to find some part-time jobs. At the hearing in July 2003 she was unemployed.

19. When she was in Canada, she bought a flat in the sum of C$105,000. Part of this sum came from her own savings. She had since borrowed C$50,000 from a friend Mr. Leung to redeem the mortgage on this flat. Mr. Leung had lent her another HK$100,000. She was therefore indebted to Mr. Leung in the sum of C$50,000 and HK$100,000.

20. She had savings of about C$10,000 and HK$73,000. Her monthly expenses were approximately HK$9,550.

21. She also has to pay rent of HK$1,500 per month for a public housing unit in Hong Kong. This unit is a replaced flat from the original public housing unit the parties were living in during their marriage.

22. The petitioner informed this Court that the rental has been paid by a friend who uses this flat. She also said that she has no interest in her father's property. It was bought by her sister for the use of the father.

23. According to the petitioner, recently she had transferred her flat in Canada to Mr. Leung in order to repay her debts to him. She and her children are living rent free in that flat. She had spent substantial time in Hong Kong since 2001. But as she is required to look after the children and she is unable to obtain employment in Hong Kong, she had decided to return to live in Canada. She came back to Hong Kong for the purpose of this appeal. She also informed this Court that she had cervical cancer and had an operation. At the moment she does not require medical attention for this illness.

The position of the respondent

24. The respondent is now 53 years of age. He works as a survey foreman in the engineering projects department of China Light and Power. His basic salary is HK$15,534. Together with perks, his average monthly income per month is HK$21,011.

25. He purchased a flat in 1997 for his new family. The flat is in the joint ownership of himself and his new wife. The down-payment of HK$102,000 was paid by his wife who borrowed the amount from her sister. The property is mortgaged at about HK$900,000. The monthly mortgage payment was about HK$8,000 and the mortgage was to have been fully repaid by October 2010 (he had since extended the repayment to 2014). The market value of the property was HK$850,000 and the amount of mortgage was about HK$720,000.

26. On his retirement at the age of 65, he will receive a pension of about HK$1,200,000. His savings were about HK$20,000. His monthly expenditure is about HK$21,000. He also owned 600 China Light and Power shares.

Enforcement of arrears of maintenance

27. Section 12 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) provides that leave of the court is required to enforce maintenance payments which are due more than 12 months before the date of the commencement of the application for enforcement.

28. The judge had considered the relevant principles on this topic. The starting point is that arrears are not enforced if they are more than one year old unless there are special circumstances. The original rationale of this rule is that if an applicant could wait for a year before she applied for the enforcement, it means that she did not need the money or at least had managed well enough without it and the husband might lawfully consider that he could disregard the liability.

29. This was the historical basis on which the rule had become established. In modern times more flexibility is shown because the wife might have savings of her own which she might use for a period of time and she would be expected to seek reimbursement by a large single payment from the husband later on.

30. Nonetheless, the court should still pay regard to the extent the applicant has taken to assert her rights. The fact that a person liable to pay the maintenance is an irregular or reluctant payer is not unusual circumstances justifying a departure from the rule : see a discussion of this topic in Russell v. Russell [1986] 1 FLR 465 and Dickens v. Pattison [1985] FLR 610.

31. The respondent claimed that he had paid 33 instalments, totalling HK$26,400 pursuant to the second order. He had refused to pay the maintenance payment under the first order, he alleges because of difficulty in getting access to the children.

32. The petitioner claimed that she simply did not have the money to instruct lawyers to pursue the matter against the respondent after the second order. This may be so, but at the same time this also shows that for many years she was able to provide for herself and her children both in Hong Kong and in Canada.

33. It must due to her own credit that she managed to improve herself and was able to obtain gainful employment during this period. However, she clearly had left the matter too late to claim for arrears in excess of ten years.

34. The judge was right when she refused to allow the petitioner to enforce the arrears beyond the one year period from May 2001.

35. The petitioner claimed that the arrears should start from February 2001 because her solicitor had made a demand for the arrears from February 2002. Her affirmation in support of the application was affirmed on 11 February 2002. She argued that the one year period should start from February 2001.

36. The petitioner left her employment in Canada in October 2000 and after some travelling between Canada and Hong Kong, returned to Hong Kong in April 2001. In my view, the judge was correct to use May 2001 as the starting date for the payment of the arrears of maintenance. This is the period from which the petitioner was not able to obtain gainful employment in Hong Kong. Prior to that she had a job and she had not shown any special circumstances which justified the enforcement of the arrears for the period before May 2001.

37. The petitioner had indeed made an affirmation in support of the application for payment of the arrears on 11 February 2002. This was filed on 5 March 2002. The court required a praecipe from her former lawyers for the issue of the judgment summons. This was filed on 26 March 2002. The document, however, was incomplete and on 3 May 2002 another praecipe was filed. This was approved on 7 May 2002 and the judgment summons was issued on 13 May 2002. The commencement of the proceedings to enforce the arrears started in May 2002. Hence the starting day of May 2001 is correct.

Non disclosure

38. The petitioner complained that the respondent had not fully disclosed his financial position. The judge found the respondent to be a truthful witness and accepted his evidence. The judge had the advantage of seeing the respondent giving evidence. In the absence of evidence to the contrary, the judge cannot be faulted in accepting the financial position of the respondent.

Maintenance of the children

39. The judge ordered the respondent to provide for the two children of his first marriage. The sum would come from a reduction of the monthly expenditure of his new family. In my view, the judge was clearly entitled to do so. She had clearly recognised some of the expenditures were not necessary.

40. The respondent had since the judgment extended the repayment period of the mortgage by another four years so that the monthly repayment is now reduced to HK$6,000. The difference is used to pay for part of the maintenance he was ordered to pay to his children.

Clean Break

41. In principle I agree with the judge's approach to order a clean break between the parties. The petitioner is now 48 while the respondent is aged 53. With her previous work experience and qualifications, the petitioner clearly has earning capacity. For over ten years after the divorce she was able to provide for herself and her two children.

42. On the other hand, the respondent has built up a new family with two children of tender age. His working life will come to an end in about 12 years' time. In the circumstances, it is clearly correct to put an end to the financial dependence of the petitioner on the respondent.

43. The petitioner disclosed that after the judgment, she sold the property in Canada to Mr. Leung in the sum of C$80,000 in order to repay the debt owing by her to him. The loan was C$70,000. The interest on the loan was C$17,500.

44. It is clear that Mr. Leung had been extremely supportive of the petitioner. She is allowed to continue to stay in the flat without the need to pay any rent.

45. The change of circumstance will make no difference to the finding of the judge because in making the order the judge had clearly recognised the petitioner had incurred this debt from Mr. Leung.

46. The difficult question is what should be the appropriate lump sum payment to be made in order to achieve this end. The judge ordered HK$30,000. The HK$176,000 ordered by the judge should, of course, be taken into account but this sum would only be available to the petitioner in 12 years' time.

47. Part of the HK$30,000 ordered by the judge was to come from the disposal of 500 of the shares held by the respondent and part would come from his saving of HK$20,000. The respondent had complied with the order. As it turned out, he sold the whole of the 600 shares for HK$20,650. The HK$30,000 paid to the petitioner came from the proceeds of sale and the balance came from his savings.

48. In my view the sum of HK$30,000 is too low. The marriage had lasted for seven years. During the marriage, the petitioner had contributed by staying at home as a housewife, looking after the two children and also by working part-time in order to supplement the family income.

49. While in about 12 years' time, she would receive HK$176,000 from the respondent, obviously she should be provided for during this lean period when she is not able to secure a permanent job.

50. The respondent informed the court that at the end of 2003, he received an extra one month basic salary of about HK$10,000, although this would be his last payment for the time being. He was usually paid a bonus of HK$20,000 in April each year. He said that there is no indication that his employer would not pay the extra bonus of HK$20,000 this year. In my view the extra payments he had received and would be expected to receive should be used to make another payment of HK$30,000 to the petitioner.

51. In any event, deduction can be made from the non essential items in his monthly expenditure like entertainment and eating out. His present wife is only 39 years of age. Now that the children are aged 11 and 9 respectively, there is no reason why she could not take up part-time employment to help out the family's financial condition. In my view, the respondent can well afford the further sum of HK$30,000 by way of lump sum payment, making the total lump sum payable by him in the sum of HK$60,000.

52. Accordingly, the appeal is allowed to the extent that instead of HK$30,000 the petitioner is entitled to receive HK$60,000 from the respondent by way of lump sum payment. As HK$30,000 had already been paid, the remaining HK$30,000 is to be paid within three months of this judgment. Other terms of the judgment below remain unchanged. There will be an order nisi that there be no order as to the costs of the appeal.

Hon. Yuen J.A. :

53. I agree.