CCS v. LSM

CACV 126/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 126 OF 2004

(ON APPEAL FROM FCMC 12462 OF 1999)

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REASONS  FOR  DECISION

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Hon Tang JA (giving the Reasons for Decision of the Court):

1. By a maintenance order made by consent on 31 October 2000, the husband, the petitioner, agreed to pay the wife, the respondent, the sum of $16,500 per month by way of maintenance.  The $16,500 was inclusive of $8,000 for rent.

2. On 6 May 2003, the husband applied to reduce the maintenance by $3,000 a month.  The variation would reduce the maintenance payable to the wife to $5,500 per month.

3. As a result of costs order made against the wife in earlier proceedings, the Director of Legal Aid imposed a first charge on the wife’s periodical payments.  The amount which was deducted from the wife’s periodical payments varied from time to time.  At one time, from June 2001 to December 2001, no deduction was made.  According to the wife, the deduction since May 2003 has been $1,500 per month.  The judge, however, proceeded on the basis as stated in paragraph 7 of her judgment, namely, that any amount over $4,800 (exclusive of the $8,000 for rent) would be retained by the Director of Legal Aid.

4. The judge also recorded that the husband “has stated right at the outset that he does not and would not seek to apply for the reduction of maintenance if the actual sum receivable by the wife i.e. $12,800 from the Director of Legal Aid is reduced”.

5. The husband has told us that that remained his attitude.

6. We believe we should proceed on the basis of the evidence which was available before the judge, in other words, that as a result of the first charge, the net maintenance receivable by the wife was only $12,800 per month.

7. The decision of the judge was arrived at by her after hearing evidence.  It was also an exercise of discretion.  The grounds on which the Court of Appeal can interfere with such decisions are limited.  However, we are entitled to interfere if the judge had made mistakes of law, or the judge had taken into account irrelevant matters, or failed to take into account relevant matters.

8. In exercising her power, the judge was required by section 11(7) of the Matrimonial Proceedings and Property Ordinance (Cap. 192) to :

“

… 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 and, where the party against whom that order was made has died, the changed circumstances resulting from his or her death.”

9. Moreover, all the matters mentioned in section 7 are to be considered for the purposes of section 11, see Jones v. Jones [1971] 3 All ER 1201.  Section 7 provides as follows :

“	Matters to which court is to have regard in deciding what orders to make under sections 4, 5 and 6
	(1)	It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-
		(a)	the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
		(b)	the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
		(c)	the standard of living enjoyed by the family before the breakdown of the marriage;
		(d)	the age of each party to the marriage and the duration of the marriage;
		(e)	any physical or mental disability of either of the parties to the marriage;
		(f)	the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;
		(g)	in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”

Section 4 covered financial provision for party to a marriage in cases of divorce, etc.

10. The judge’s approach to this application can be gathered from the following passages in her judgment :

“	… However as the application is not based on the wife’s circumstances but solely on the husband’s reductions in salary, loss of housing allowance and debts.  I must consider his application as it is presented before me.
	I am satisfied that from December 2003 at least until April 2004, the husband will have a significant drop in his income and will be required to reduce the maintenance payable to the wife.  For that period, the maintenance will be reduced by $3,000.  Thereafter, upon the husband’s rearrangement of his mortgage repayment, the maintenance to the wife will be increased again by $1,500.  So as from today, the amount will be reduced by $1,500, to continue until further order.”

11. It is not very clear whether the judge proceeded on the basis that the change in circumstances on the part of the husband were outside the husband’s contemplation at the time of the consent order. 

12. She referred to the husband’s reduction in salary.  She said in paragraph 18 of her judgment that the husband would receive a salary reduction from January 2004 to $71,850 which would be further reduced to $69,615 in January 2005.  That may be so.  But the evidence of the wife was that the husband’s salary in October 2000 was $68,300.  The judge made no finding.  However, the husband confirmed before us that his salary in October 2000 was indeed $68,300.  So even as from January 2005 when his salary was reduced to $69,615, he would still be earning more than what he was earning in October 2000.  So there was in fact no reduction in salary.

13. The judge also referred to the loss of housing allowance of $18,450.  But that was fully within the husband’s contemplation at the time of the consent order. 

14. Then the judge referred to debt.  That seemed to be based on the husband’s allegation relating to the loss arising out of the sale of the matrimonial home and another property.  It was the husband’s case that because of the conduct of the wife, the loss from the sale was greater than anticipated.  But the judge made no finding on it.  Nor was there any real evidence on the additional loss as a result of the delay in the sale. 

15. It was part of the consent order of 31 October 2000 that the husband should bear the loss arising out of the sale of the two properties.  Apart from the husband’s bare allegation, there was no actual evidence whether there was any additional loss arising out of the sale of the properties taking place in March 2001 rather than say within a shorter time of the consent order.

16. One of the husband’s indebtedness was incurred by him as a result of his purchasing 44% of a property which he shared with his then girlfriend, now his wife.  That transaction was entered into so that he should not lose the benefit of his housing allowance for its maximum duration.

17. However the evidence relating to this transaction can at best be described as unclear.  For example, it is unclear why although the husband purchased the 44% from his girlfriend for $1,000,000, the mortgage that was entered into by him was in the sum of $1,645,000.

18. Be that as it may, on an application for variation made under section 11 of the Matrimonial Proceedings and Property Ordinance, Cap. 192, the success of the application does not depend necessarily on change circumstances nor indeed on the change in circumstances being unanticipated.  What the court should do is to look at the application to vary, on the basis of the means of the parties as they stand at the time when the case is before it and approach the matter as if it were assessing the payments de novo.

19. Here, the learned judge concentrated on the change in circumstances on the part of the husband.  No, or inadequate consideration had been given by her to the wife’s need or her circumstances.  Even if we are prepared to proceed on the basis that the reduction of $3,000 would have no immediate impact on the actual receipt by the wife because of the Director of the Legal Aid’s first charge, the fact remains that it would take longer before the Director of Legal Aid is completely paid off.  Moreover, the order made by the learned judge was open-ended.  It would put the burden on the wife to apply for a further variation in order to regain the $3,000 deducted. 

20. In our view, in coming to her decision, the judge failed to have sufficient regard to section 11(7), in particular, the circumstances of the wife and her needs.  So we are entitled to intervene.

21. That being the case, it is our duty to exercise our discretion on the material before us.  On the material before us, we do not believe that the husband has made out a case for the variation of the maintenance order. 

22. The wife is unemployed.  There is no evidence that she ever work after her pregnancy.  She has to look after her son who is now 14 years old.  After deduction for rent and the Director of Legal Aid’s first charge, her maintenance has been reduced to $4,800 a month.  This is to be compared with the husband’s income of $69,615 a month after January 2005.

23. Moreover, we must look at the wife’s needs.  Something, which the judge seemed not to have done.  In the third affirmation of the wife at page 10(1c), we found a statement of her income and expenditure showing a monthly deficit as well as her negative bank balance of $69,600.  In all the circumstances, we do not believe that a case for variation has been made out. 

24. For the above reasons, we allowed the wife’s appeal and set aside the order of the judge.  We also order the husband to pay the wife’s costs in the sum of $2,200 to reimburse her for her out of pocket expenses.