XCHRX BRIAN LAWRENCE KING v. JULIE CAROL KING

1986, No. DJ5

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATION REGION

(DIVORCE JURISDICTION)

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

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

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

J U D G M E N T

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

1. I have before me an application by Brian Lawrence King, whom I shall call the Applicant, seeking variation of an order of this Court dated 4th May 1987 in terms of which he has been obliged to pay periodical sums of maintenance to the Respondent, Julie Carol King, his ex-wife. The maintenance payments have been for the support of both the Respondent and the two children of the marriage.

A brief background

2. The parties were married to each other in England in 1977 and shortly thereafter settled in Hong Kong where both now permanently reside. Two daughters were born of their marriage. They are Gemma, who was born on 21st July 1978, and Francesca, born on 8th September 1984. In or about August 1985, a year after Francesca's birth, unhappy differences resulted in divorce proceedings. These were at times acrimonious and were not finally concluded until mid 1987. In the result, the Respondent was given custody of the two daughters while the Applicant enjoyed rights of access to them. As concerns property, an agreement was reached which enabled the Respondent to purchase a home for herself and the girls in Sai Kung. That residence, known as 2 Bayview Villas, Tso Wo Hang, Sai Kung, is still occupied by Respondent and the daughters although the elder daughter now spends a good part of the year at university in the United Kingdom.

3. As concerns maintenance, in February 1987 it was ordered by this Court that the Applicant :

".....do pay or cause to be paid to the Wife and children (Gemma and Francesca) periodical payments at the rate of HK$20,000 per month payable monthly in advance during joint lives until the Wife's remarriage or until further order such periodical payments to be increased annually in accordance with the Cathay Pacific cost of living index."

4. In his affidavit of 5th February 1997, the Applicant stated that, as a result of the annual increases, he was then paying a sum of $34,731 per month in terms of the order. It is this order which the Applicant now seeks to vary. His application is not based upon inability to pay, that much he has made clear in his affidavit. It is based rather on four factors.

5. First, the original order did not differentiate between maintenance due to the Respondent and that due to each daughter. When the daughters were younger and (with their mother) constituted a single household that was not a problem. But now, with the daughters that much older, it is argued that the need to differentiate has become critical.

6. Second, the Applicant contends that his eldest daughter is now nineteen years of age, turning twenty in the summer, and is attending university in the United Kingdom. He is funding her university expenses and contends that there should be recognition of the fact that for a material part of the year Gemma is no longer at home with her mother (the Respondent) but is living independently in the United Kingdom on moneys provided by him. He further contends that he should be entitled to deal directly with Gemma in respect of her university moneys rather than having to channel it through the Respondent.

7. Third, it is argued by the Applicant that the Respondent has been working for a number of years and has been earning more than she is prepared to admit.

8. Fourth, it is the Applicant's contention that the Respondent has been and continues to cohabit with a gentleman. This, it is argued, is a relevant factor to be considered in assessing an equitable sum of maintenance as that gentleman, the cohabitee, must be making some financial contribution to the Respondent's household expenses.

The Applicant's present financial position

9. The Applicant has now re-married. There are, however, no children born of the present union. I am advised that his new wife assists in the management of a property company on Lantau Island; the Applicant used to have a financial interest in that company but no longer does so.

10. When he first came to Hong Kong, the Applicant was employed as a pilot by Cathay Pacific. He remains in that employment and now holds a position of considerable seniority with the airline. He presently earns a gross monthly salary of around $250,000 (including housing allowance) from which, of course, there are regular deductions for medical insurance and the like. His long term future is secured with a provident fund that, in another ten years or so, should provide him with retirement capital of around $20,000,000. He owns a residence on Lantau Island in which (subject to fluctuations in the market) he has an equity of some $15,000,000. There is also a holiday home in Australia.

11. In fairness, of course, as I have said, the Applicant does not dispute his present affluence. But in considering any application for variation of a maintenance order, the present financial position of the parties is a fundamental factor for consideration. This is especially so as both daughters are entitled to expect, as far as circumstances allow, the same standard of living as if the Applicant and Respondent had never divorced and had both honoured their financial obligations to them.

12. In considering an application for variation, I am not required to proceed from the starting point of the original order but must look at the matter de novo although obviously any material change in the matters to which the Court was required to have regard when the original order for maintenance was made are of relevance. In my judgment, therefore, in matters of this kind I should adopt the approach approved in Flavell v. Flavell [1997] 1 FLR 353 (at 357G); namely, to look first at the present situation, examine the basis of the original order, consider events since that order was made and decide what is fair in the light of those matters.

The Respondent's present financial position

13. The Respondent's present financial position was a matter of central dispute. It was alleged by the Applicant that, on Respondent's own figures as revealed in her affidavit and her various exhibits, the probabilities indicate that she has been in receipt of a greater income than she has been prepared to divulge.

14. In her affidavit of 28th February of this year, the Respondent stated that she had worked for several years as a property negotiator, being employed in the Sai Kung area by an organization called Town and Country Properties. She indicated in her affidavit that she earned $10,500 per month as a basic salary but, with commissions added, her average monthly earnings were increased to $15,500. However, when asked to supply a copy of her relevant income tax forms for the year ended 31st March 1997, her employer's return of remuneration stated that she had earned a basic salary of $128,000 and commissions of $154,792, making a total income during that tax year of $282,792. This would have averaged $23,566 per month, a figure of $8,066 more than her stated monthly earnings. The Respondent accepted that she had, for the period of that tax year at least, miscalculated her earnings.

15. Perhaps of more concern to the Applicant was the Respondent's stated list of monthly expenses. In her affidavit of 28th February the Respondent set these expenses at around $87,900 per month. These were the expenses, she said, that were incurred by her on behalf of the household, herself, her two daughters and the infant child of her eldest daughter, a boy named Jack. As a result of such outgoings, the Respondent stated that she was left with a shortfall each month. Indeed, it would be a most substantial one. Calculating matters on the basis of her revised earnings of $23,500 per month and allowing for the Applicant's maintenance of $34,731, it would leave a monthly deficit of approximately $29,500; an annual shortfall in excess of $350,000.

16. In the course of cross-examination, having been shown summaries of her bank statements for the past eighteen months which revealed an average monthly withdrawal of just $61,669, even making allowance for certain credit card bills, the Respondent was constrained to accept that she had, in fact, originally miscalculated her monthly expenses, setting them at too high level. Those figures, she said, had not been double-checked before being enshrined in her sworn document. In fairness to Respondent, she did submit a revised schedule of expenses which totalled $67,255 per month, a figure much closer to her proven monthly withdrawals from her bank. The revised schedule, however, on her own admission, did not include what might loosely be called 'extras' which would, to a degree, increase those average expenses.

17. With an accepted monthly income averaging $58,250, the Respondent said that she did her best to cope with her expenses which were in excess of her income by having recourse to overdraft facilities and credit card spending. It was suggested to her, however, that the figures had to indicate an undisclosed source of income, one to which she would make no admission. Specifically, it was put to her that the extra moneys had to come from the gentleman with whom she was having an affair, moneys that he paid towards the household expenses because he was cohabiting with her. This was denied by Respondent. She did not live with that man, she said. At best he stayed over for a night or two when he was on business in the region. He paid for the occasional dinner and brought her the odd gift but there was no contribution to household expenses.

18. How then do I approach the matter? In family law matters of this kind it is axiomatic that the parties must show candour in revealing their true financial positions and exercise a high degree of exactness in ensuring the accuracy of what they reveal. The Respondent in this matter has not assisted her cause by failing to meet those standards of candour and accuracy. However, that being said, it is the task of this Court to seek out the true position even if one or both of the parties have failed to reveal it.

19. Family law courts are regularly faced with the situation where parties attempt to minimise their incomes and maximise their expenses. It is trite to say that, within the bounds of rationality, any list of expenses can be creatively expanded or contracted to meet any need. Too often parties detail their monthly out-goings not on the basis of what prudence and reality have dictated but rather on the basis of what they believe they should be entitled to spend. Hence, as was said in Moon v. Moon[1989] 1 FLR 115 per Waterhouse J :

" The Divisional Court has said over and over again, in considering appeals from magistrates, that it is essential, whether one is considering the wife's maintenance or a child's maintenance, to take as the starting point the actual earnings of the parties in gross terms and to make basic calculations on that footing without being unduly influenced by detailed calculations of the outgoings on either side. Outgoings are not wholly irrelevant but the primary calculation and the essential starting point is the gross earning capacity or actual earnings on the one hand of the father and on the other hand of the mother.

When one adopts that approach one sees how surprising it is that a man with an earning capacity in excess of 4,000 per annum gross should contribute only 3 a week each to the maintenance of his two dependent children."

20. I have considered Respondent's evidence with care. I have studied her various exhibits. Having done so, despite her initial lack of candour, I am satisfied that it would be wrong to draw an inference that her monthly expenses are, in fact, in the region of $87,000 per month. I am further satisfied that it would be wrong to draw any inference that the Respondent is in receipt of an undisclosed income from the gentleman with whom she has been conducting an affair. In my judgment, the reality of the Respondent's financial position is more accurately reflected by stating that, due regard being had to the volatility of the Hong Kong property market, she earns an average of about $23,500 per month and has monthly expenses at this time of about $59,000 - $60,000 per month. This leaves her with a shortfall of approximately $35,000 per month, a sum which the Applicant accepts that he is well able to pay.

21. I accept, of course, that the figures have been calculated historically and I accept that Gemma now spends a good part of the year at university in England, a significant extra expense which is being met by the Applicant. But it must be remembered that Gemma still uses the Respondent's home as her home during vacation time and all the household 'basics' must therefore remain in place for when she is back in Hong Kong. It must further be remembered that, although there has been an annual cost of living increase in the maintenance, there has not at any time been a re-assessment of the maintenance taking into account, for example, the fact that both daughters are now young women and that much more expensive to maintain. In such circumstances I do not think it would be equitable at this time to cut back on Respondent's total maintenance by reason of the fact that Gemma attends university.

Respondent's alleged co-habitation

22. The Respondent has denied any form of settled co-habitation with the gentleman with whom she has admitted a love affair. That man lives in England, she said, and does no more than stay for short periods of time when he is passing through Hong Kong on business. She has admitted going on holiday with him but does not admit any contemplated relationship of a permanent nature. The Applicant himself (who, in my judgment, gave his evidence without exaggeration in the fairest manner) accepted that the evidence in his possession of settled co-habitation was at best oblique. In all the circumstances I am satisfied on the probabilities that there is not at this time (nor has there been in the recent past) any state of settled co-habitation between Respondent and that man.

23. It is clear in our law that mere acts of sexual intercourse are not sufficient to deny a woman periodical payments of maintenance. See, for example, Stead v. Stead [1968] 1 All ER 987. Of course, when a woman conducts a settled sexual relationship falling short of cohabitation it may be that the sense of justice of the reasonable man and reasonable woman would be offended if the same were not taken into account when determining the woman's award of periodic payments, notwithstanding that the woman derives little (if any) financial benefit from the relationship. But there is no settled principle on the matter. As was emphasised by Thorpe J. in Atkinson v. Atkinson [1995] 2 FLR 356 :

"....... it seems above all that the court should strive to discern the realities in determining what weight to give to the factor of cohabitation."

24. In S. v. S. [1986] 3 All ER 566 the Court was called upon to consider a similar situation to the one under consideration in this present case; namely, where the ex-wife accepted that she had a lover who was occasionally generous to her by way of presenting gifts and the like but where she made it clear that she had no intention of allowing the relationship to develop into one of settled co-habitation. Waite J. (at page 573) said :

"The husband's counsel cited a number of cases in which judges have been called on to deal with the impact on a husband's maintenance liability of relationships maintained by particular claimants, in varying degrees of intimacy or dependence, with a third party. No principle is in my judgment to be deduced from them, nor, with respect, do I see how such issues can ever be concluded by authority. In a jurisdiction as discretionary as this one, such relationships are certainly to be taken into account as one of the many factors to which the court is bound to have regard, but in the delicate weighing process which the discretion involves of one factor against another, they are not entitled to any advance marking on the scales."

25. In discerning the realities of the relationship between the Respondent and her gentleman friend, I am satisfied that it would be wrong at this time to make any finding that impacted adversely on the wife's entitlement to reasonable periodical maintenance from the Applicant. I understand, of course, that the Applicant does not wish to pay maintenance which will be used in part to support the living of another man. Very few men would be happy with such a situation. But I am satisfied on all the evidence presented to me that this risk does not presently exist.

The Respondent's need to be self-sufficient

26. As one of the reasons for urging that the Applicant's continuing maintenance payments to the Respondent should cease, the Applicant's counsel has urged upon me that the Applicant is entitled to know that there will be some finality in the matter. As he put it, it was only a seven-year marriage and if maintenance payments continue until the year 2002 then Respondent will have received maintenance for a period of time double the length of the marriage.

27. That may be so but it must be remembered that two daughters were born of the marriage and they have been in the Respondent's custody. The youngest daughter is still going to school here in Hong Kong and to a degree, the Respondent must set the pattern of her life around the educational and social needs of that daughter.

28. While ideally the courts seek a situation in which both parties are self-sufficient this can only be achieved when circumstances allow. At this time the Respondent's expenses are inextricably bound up with those of her children and in my judgment the circumstances are therefore not right for a finalisation of maintenance payments to her. I accept that Respondent owns her own home in Sai Kung in which at this time she has a free equity of some $6,000,000. But, with both daughters using it as their residence too, I do not see how Respondent can be pressed into selling the home.

Payment of Gemma's university expenses

29. The Respondent has raised no objection to the Applicant dealing direct with Gemma concerning her university fees and expenses. It does, in fact, in the circumstances, appear to be the ideal solution. The Respondent emphasises, however, that during university vacation Gemma returns to Hong Kong and during those several months she lives at home. This naturally adds to utility charges, food bills and the like. The Respondent seeks some assistance with these extra costs. I consider it to be a reasonable request.

30. As to the quantum of that support, reduced to a monthly figure, in my judgment a sum of $2,500 would be appropriate.

31. At this juncture let me say that the Applicant must be commended for the forthright manner in which he has accepted his financial responsibilities to both of his daughters. He has, for example, for some time now been providing extra moneys to both girls.

Orders

32. Accordingly, my orders are as follows :

33. The Applicant (the husband) having undertaken to be responsible for payment of all fees and other reasonable expenses, including subsistence allowance and travel costs, to enable the daughter, Gemma (born 21st July 1978) to complete her tertiary education and having undertaken to deal directly with the institute of learning and with Gemma in respect of such fees, expenses and allowances;

Now therefore it is ordered :

1. That the order of this Court dated 11th February 1987 be and is hereby varied as concerns the payment of periodical payments of maintenance to the Respondent (the wife) and the two children of the marriage, Gemma and Francesca, so that such order shall now be as follows :

a. That in addition to those moneys payable in terms of his undertaking, the Applicant (the husband) shall pay to the Respondent (the wife) as and for the maintenance and support of Gemma the sum of $2,500 per month, the first such payment to be made on 3rd January 1998 and thereafter on 1st day of each month until Gemma shall have completed her tertiary education or be in full-time employment whichever shall be the sooner.

b. That the Applicant (the husband) shall pay to the Respondent (the wife) as and for the maintenance and support of Francesca the sum of $12,500 per month, the first such payment to be made on 3rd January 1998 and thereafter on 1st day of each month until Francesca shall have completed her full-time education or have attained the age of 21 years whichever shall be the latter.

c. That the Applicant (the husband) shall pay to the Respondent (the wife) as and for her maintenance and support the sum of $20,000 per month, the first such payment to be made on 3rd January 1998 and thereafter on 1st day of each month until the Respondent's death or marriage or until further order.

d. That in respect of each order of maintenance, each shall separately be increased annually in accordance with the Cathay Pacific cost of living index.

2. In the absence of agreement as to costs, liberty be and is hereby given to either party to apply.

(M.J. Hartmann)

Deputy Judge of the Court of First Instance
High Court