BX v. BMPE

FCMC 14697 / 2011

[2019] HKFC 72

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 14697 OF 2011

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

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

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

J U D G M E N T

(Variation of maintenance)

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

Introduction

1.  This is an application by the Petitioner father for a variation of maintenance as follows:

1.  Varying the monthly maintenance given by the Petitioner to the children from HK$10,000 per month per child to HK$5,000 per month per child.

2.  Varying the maintenance for the Respondent from HK$1 per annum to 0.

2.  During the hearing the mother eventually conceded the second point, given that she is now in a legally recognised de facto relationship in New Zealand and she has had a further child with her new partner. In such circumstances she agreed that it was no longer appropriate for there to be a nominal maintenance order in place. Two things flow from this, firstly order 2 contained in the court order dated the 18 July 2014 shall be discharged and this will be dealt with formally at the end of the judgment; secondly it follows that this judgment is only concerned with the appropriate level of maintenance to be paid by the father for the two children of the family. In addition, the mother has issued an application for a judgment summons (now an examination summons). Further directions in this respect will also be given at the end of the judgment.

3.  This application is also being brought when neither party currently resides in Hong Kong. The mother relocated to New Zealand with her new partner in 2014 and the father subsequently relocated to Taiwan. He had also initially re partnered but unfortunately that relationship has since broken down. This makes applications of this nature particularly difficult given that the court has no general sense of the cost of living in either of the two other jurisdictions.

Background

4.  The parties issued divorce proceedings in Hong Kong, which is where they were then residing, in October 2011. The father is French and I believe that the mother is also of European descent. She is a Spanish speaker. On the 14 August 2012 the parties initially agreed that there should be joint custody of the two children of the family with care and control to the Respondent mother and reasonable access to the Petitioner father. The decree nisi was granted on the 23 January 2013 and the decree absolute followed on the 14 March 2013. The parties also reached a comprehensive agreement with respect to their finances at a Financial Dispute Resolution hearing on the 19 November 2012. On that occasion it was agreed that the father would pay maintenance to the mother of HK$15,000 per month per child and an additional HK$2,000 per month for the mother, which was later to be reduced to HK$1,000 per month. In addition, a mortgage free property in France was transferred to the mother in full and final settlement of her capital claims. The maintenance levels were agreed on the premise that the mother and the two children would continue to reside in Hong Kong in the immediate to short term.

5.  At that stage the father was running his own small product design company and the mother earned a nominal amount as a school monitor. The father has continued to run his own small company, although the nature of his client base has changed over the years. The mother has continued in her role primarily as a full time mother. The children of the family are now aged 13 and nearly 10 years of age.

6.  The parties returned to court in early 2014 on the mother’s application to vary the custody order and to relocate permanently to New Zealand. On the 24 March 2014 it was agreed that the mother should have sole custody and care and control of the children with reasonable access to the father. On the 18 July 2014 it was ordered that the maintenance for the children be reduced to HK$10,000 per month per child, partly on an expected reduction in the cost of living in New Zealand and also because of the father’s reduction in income. The father was also and understandably very concerned that he should be able to afford to see the children frequently and that the cost of travel needed to be accounted for. At that stage it was also the mother’s case that she intended to work in New Zealand.

7.  In the judgment of the 18 July 2014 I also stated inter alia as follows:

11. The husband has been able to produce evidence to show that his income has fallen since December 2013. He was in full time employment from September 2012 to November 2013 and at that stage he was earning HK$50,000 per month. Thereafter he began working on a freelance basis and his income consequently become more unstable. He says that the present maintenance level is not sustainable. I accept what he says in that respect. I also accept that he had foretold this in the consent order arising out of the FDR hearing.

12. The wife was given an opportunity to file and serve an affirmation setting out the proposed expenses in New Zealand and her plans generally in that respect. She subsequently filed an affirmation which was filed on the 23 May 2014. In total she estimates that she will need almost HK$42,000 for the children’s basic expenditure plus a further sum for travel. In total she claims HK$52,150 per month. The difficulty is that the wife was not able to provide the court with any information about her own plans other than the fact that she intended to work. She was not able to indicate what kind of income she might hope to achieve. She included a significant fee for after school care – but it was not clear if that would be needed. Further she also included a figure of HK$9,200 for rent and rates for the children, whilst at the same time acknowledging that the children would be living with her and her new partner in a property held by a family trust. In other words the implication was that the there would not be any actual rent to pay. In such circumstances it does not seem to me to be fair or reasonable to attribute such amount to the children. Certainly if the property is mortgaged I would not expect the husband to be contributing towards the new partner’s mortgage repayments in any event. Other expenses were also quite high and unsupported. The wife acknowledged this in part when she said that she would have a clearer idea of actual expenses once she had moved to New Zealand but at present what she had provided to the court were estimates.

13. The husband for his part said in his closing that the wife had not really submitted any evidence to support her case and that he “truly believe we can save a bit in most of the areas”. I would accept that to be the case.

8.  In reality and despite the mother’s assertions on the last occasion, it seems that the mother has never worked in New Zealand. According to her Form E she continues to be a full time mother and housewife. It is also acknowledged that a third child of the mother and her new partner, was born on the XX September 2016 and is still very young. She says that she expects to return to work at some point but again reiterates that the cost of child care is expensive. During the trial she also said that she would like to look for a part time job and she thought she might be able to return to work in about a year or so. However, it seems that this is by no means a definite proposal.  

The law   

9.  As before the father’s application 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 ……”

10.  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 bound 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 3.147 – 3.157 Jackson’s Matrimonial Finance and Taxation, 8^th edition where it stated as follows:

The modern approach is that the Court has to consider all the circumstances of the case, and the Court is not hide-bound by the existence of a previous Order; the Court must look at the case de novo and make an Order that is reasonable in the current circumstances.  The usual basis on which a variation of an Order for periodical payments is founded is that there has been a material change in the circumstances of one or both the parties.  On application for revision, the Court, as it was put in one case, has ‘regard to all the circumstances of the case’ in the same manner as if those circumstances had existed at the date of the original Order.

It is also true that there would normally be a reason for the application to vary or what some might call a “trigger”.

11.  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 issue

12.  There is then only one issue to be determined, namely how much maintenance should the father now pay to the mother for the two children of the family?

The mother’s analysis of the father’s evidence  

13.  At the trial the mother produced a document entitled Annexures 1 – 10. There were several difficulties with this document, some of which were explained to her during the hearing. Firstly, there is an implied undertaking in family proceedings in Hong Kong. The proceedings are private and confidential and neither party can show any of the court documents to a third party without first seeking the courts express approval. This was not done in this instance. It seems that the mother shared the Court documents with a Mr M (her partner’s father) and Ms H (her partner’s sister) and that they then produced their own analysis of the father’s finances based on the Court documents that he had produced. It is not clear what instructions they were given. If they are to be regarded as expert witnesses, they have clearly not complied with any of the provisions in Order 38 Part IV on Expert Evidence. On that basis alone it is clear that the court cannot place any weight on this document. Other points include the fact that the father was not shown this document ahead of time and was to a certain extent “high jacked” as a result.

14.  In such circumstances, it does not seem to me that it is appropriate for the court to attach any weight to this document, or to any submissions made with respect to it.       

Each party’s case

The father’s case

15.  In summary it is the father’s case that his income has fallen again and that this can be seen from the documents produced. He says that it is imperative that some funds are kept within the company so that he is able to run it. He does not accept the mother’s allegations, which simply put include the suggestion that his documentary evidence does not come up to proof and that it is contradictory. He reiterates that the monies used for access are a priority and that the parties must cut their clothe according to what is available.

The mother’s case

16.  In contrast it is the mother’s case that the parties have an ongoing obligation to support the two children, which includes financial support. She maintains that the father must do everything within his power to meet his financial obligations towards the children. She does not accept that he makes his financial obligations towards the children his number one priority. Put simply she does not accept that he cannot afford to pay. In addition, she says that he has an earning capacity and that he must now realize such earning capacity.      

Variation of maintenance

The expenses

17.  As indicated above it is the father’s case that his income has dropped by about a further HK$100,000 per annum and that consequently he can no longer afford to pay maintenance of HK$10,000 per month per child. He puts it as follows in his supporting affirmation:

1.  In regards to the maintenance to the children:

I have managed with great difficulty to pay the monthly maintenance to my children until March this year [2018], despite a slightly decrease of income in the years 2014/2015 and 2015/2016.

Unfortunately the situation has worsen dramatically in the year 2016/2017 where my freelance activity income has dropped from HK$579,423.33 to HK$480,563.00 for that fiscal year, which is a decrease of nearly HK$100,000. 

The situation has not improved in the year 2017/2018 and worses due to the bad economic situation in the E. U., Two of my main clients are cutting their budget with me, for the coming year, for which I thus forecast another dramatic drop of income.

18.  This is not accepted by the wife who says that the children’s costs amount to HK$21,000 per month. She has estimated that figure by dividing the essential general expenses by 5 – i.e. all of the members of the household, including the toddler. She does not acknowledge that she should be responsible for any share of the children’s expenses. She sets out the basis for her position in section 4.1 of her updated Form E dated the 5 July 2018. In her summary she states as follows:

SUMMARY OF S & A [the children’s] MONTHLY EXPENSES

	NZ$	HK$
Monthly General Expenses – 40% share	$1,515		40% of $3,787 Monthly
Monthly Care Expenses – 50% share	$138		50% of $276 Monthly
Monthly Children Expenses – 100% share	$2,129		100% of $2,129 Monthly
	_________	_____________
Total Children Monthly Expenses 2018	$3,782	$21,111
	========	============

19.  She substantiates these figures by reference to the general household expenses and the children’s actual expenses. She says that the general household expenses break down as follows:

General Expenses

Items	Yearly Expenses	Monthly Expenses	Monthly Expenses	Notes/ Comments
		(NZ$)	(HK$)
Rent		NIL	NIL
Mortgage Installments		NIL	NIL
Utilities		$389	$2,172
Power	$2,627
Internet	$1,085
Sky Television	$958
	________
	$4,669
	________
Management Fees		NIL	NIL
Food		$1,888	$10,536
Food at Home	$17,900
Meal`s out	$4,750
	________
	$22,650
	________
Household Expenses		$406	$2,265
Bunnings/M 10 / Briscoes / Bed+Bath etc.	$2,470
House hold layby item	$2,400			Replacement of household appliances + furniture
	________
	$4,870
	________
Insurance		$232	$1,295
House & Contents	$2,323
Marram Trust	$380
St Johns	$80
	________
	$2,783
	________
Domestic Helper		NIL	NIL
Others		$873	$4,872
General Cash expenses (ATM withdraws)	$760			Does not include additional cash supplied by R. O. Cannot accurately quantify, estimate to be > NZ$2,000 per annum
Rates	$2,856
Household Maintenance
Gas Hot Water            $3784.38
Roof Stairs                  $1,000.00
Alarm Service                $100.00
Heat Pump fix                $472.36
Living Room renovation  $1,500.00
__________
	$6,857
	________
	$10,473
	______________________________________________
SUB – total monthly expenses		$3,787	$21,140	This cost is spread equally over 5 family members
		=================================================
P, S & A – 60% Share		$2,272	$12,684
Car Expenses		$276	$1,538	This cost is share over only 4 family members. PS, A & MR has a company supplied vehicle
Petrol – General ($85/3 weeks)	$1,500
Petrol – Holiday Queenstown	$170
Insurance (Premium & Excess)	$523
WOF	$58
Registration	$77
Service	$400
AA Membership	$79
Maintenance	$500
	______
	$3,307
	______
P, S & A – 75 Share		$207	$1,154
		__________________________________________
Total General Monthly Expenses		$2,479	$13,837
		===================================

20.  In so far as the children’s actual expenses are concerned she further states as follows:

Children – S + A

Items	Yearly Expenses	Monthly Expenses (NZ$)	Monthly Expenses (HK$)	Notes/ Comments
School Fees     S – Kir     S – Kir School Camp     A – W	$576 $583 $300	$122	$679
	_____
	$1,459
	_____
Extra Tuition Fees		NIL	NIL
School Books, Stationery & Equipment     Printer cartridge, paper, pens etc.	$420	$35	$195
Transport to School (including school bus)		NIL	NIL
Medical/Dental     S – Doctor     S – Orthodentist     A – Doctor     Medicine – NZL     Medicine – FRA     Medicine - HKG	$50 $80 $35 $530 $65 $25	$65	$365
	______
	$785
	______
Extra Curricular Activities     S – Soccer fees     S – Soccer uniform & equipment     S – Swimming fees     S – Swimming equipment     S – Cricket fee     S – Cricket uniform & equipment     S – Table tennis     S – Sailing uniform     S – Boy Scout Camp	$160 $250 $680 $160 $130 $250 $100 $520 $170	$347	$1,935	Rhys O – Sailing account
A – Swimming fee     A – Swimming equipment     A – Gymnastics fee   A – Gymnastics uniform	$580 $180 $780 $200
	$4,160
Entertainment/Presents     S – Birthday & Christmas     A – Birthday & Christmas     Entertainment – A + S NZL     Entertainment – A + S FRA     Entertainment – A + S HKG	$800 $800 $1,800 $450 $280	$344	$1,921
	$4,130
Holidays          Raincliff     Return Ticket to Hong Kong     Overseas Travel Insurance     New Luggage for travel     Hong Kong Accommodation     S ISAC card     A Passport	$200 $2,200 $285 $190 $150 $30 $365	$285	$1,591	Airfare estimated on unaccompanied travel, A, 9 years ($1,000) + S, 12 years ($1,200) Include trip to Wellington to pick up and transfer of visa between passports
	$3,420
Clothing + School Uniform + Shoe     S – School Uniform     A – School Uniform     Clothes NZL account     Clothes HKG account     Clothes FRA account	$750 $750 $2,700 $530 $840	$464	$2,591
	$5,570
Insurance Premia     NIB Health Insurance	$451	$38	$210
Lunches + Pocket Money     Lunches     Pocket Money	$200 $520	$60	$335	1 lunch per child per fortnight, $5 per lunch $5 per child per week
	$720
Other Transport		NIL	NIL
Child Minding Fees		NIL	NIL
Others     Monthly Savings – S +A     Parenting Class – Tough love     Haircuts – S + A     Cellphone – S     New Zealand Visa     Non credit card incidental expenditure	$2,400 $40 $290 $240 $167 $1,300	$370	$2,064	For future tertiary education or trade costs Approximately $50/fortnight
	$4,437
		_____________________________
Total Children Monthly Expenses		$2,129	$11,886
		===========================

21.  A couple of points arise from these schedules. Firstly, as before, I do not accept that it would be appropriate to attribute the cost of maintaining the house, which I was told previously is held by a family trust (see paragraph 12 of the judgment dated the 18 July 2014 and paragraph 7 above) to the cost of maintaining the children. This is a capital item, the upkeep of which should not be rolled into the children’s maintenance. Thus it seems to me that the household maintenance figure of 6,857 should be removed from the calculation. I have a similar difficulty with the reference to rates and household insurance.

22.  Conversely it is accepted that although the mother does not offer to make any direct financial contribution towards the children’s expenses, that it is clear that she is providing a home for the children and that this should therefore be regarded as her financial contribution towards their upkeep. In addition, it seems to me that both parties should be responsible for their own holiday costs with the children. The father has also confirmed that he always pays for the cost of the children’s access to him, including the cost of all of their flights.

23.  I accept the figures for the utilities, food, household expenses, the remainder of the insurances and the general cash expenses. I also do not intend to interfere with the estimates for car expenses. In so far as the children’s direct expenses are concerned the father has confirmed that he is separately paying half of S’s orthodontic treatment. It is not clear if this adjustment has already been allowed for.

24.  The father did not challenge the wife’s expenses during the trial. However, in his final reply submission he made the following comments:

Respondent’s submission point #31:

     The Respondent indicates that such basic expenses as food, clothing and activities would have to be reduced in the event of a lower maintenance amount.  Understanding and accepting that the Court will use its own discretion while reviewing these expenses, I have nonetheless gone through the list furnished by the Respondent in her annex to Form E “Expense cover sheet” to get an idea of what a reasonable allocation for the basic expenses of the children might be. From the listings “4.1 general expenses” and “4.3 children expenses” I have identified the following line items:

Utilities: 2172/5*2 = 868.8

Food: 10536/5*2 = 4,214.4

School fees = 679

School books, Stationary & Equipment = 195

Medical/ Dental = 365

Extra curriculum Activities = 1,935

Clothing + School uniform + shoes = 2,591 (out of it clothing ~ 1,758)

Health Insurance = 210

Lunches + Pocket money = 335

These total HK$11,393.20

These appear to largely cover the basic expenses for the children, including some not mentioned by the Respondent, and total well less than HK$20,000.  Only a small reduction in the clothing and extra curriculum would suffice to reach HK$10,000 in the event the court agrees to adjust the maintenance to this level.

     I would like to further point out however a couple of things: (1) in addition to the maintenance, I am covering a lot of the kid’s holiday expenses when they travel to Taiwan or when I travel with them in New Zealand;  (2) I also cover some extra-curricular activity, such as A’s climbing sessions from time to time;  (3) to clarify the Respondent’s direct statement regarding the children’s return trip to Hong Kong in order to visit me, I have in fact paid all of their return tickets to Hong Kong and Taiwan since 2014.

25.  As indicated above, given that the mother is providing a home for the children and she has no income of her own save for a very small rental income from the property in France, it is not accepted that it would be appropriate for the father to halve the cost of the utilities and food as set out above.

26.  Having considered all of the above, it seems to me that a more realistic schedule of the general expenses for the children, in Hong Kong dollars, is as follows:

General

Item	Amount
Rent	N/A
Mortgage Instalments	N/A
Utilities	$2,200.00
Management fees	N/A
Food	$10,550.00
Household expenses	$2,265.00
Car expenses (75% share)	(1,600.00)
Insurance premia	215.00
Domestic helper	N/A
Others General cash expenses	5,000.00
Total monthly household expenses	HK$20,230.00

27.  Of this 40% should be attributable to the children i.e. HK$8,092 (i.e. 40% x HK$20,230 = HK$8,092). The rationale for the calculation for the car expenses is a little difficult to follow, but in any event I will then add the 75% share rounded up to an additional HK$1,600. In total then the children’s share of the general and car expenses adds up to HK$9,692.00 per month (i.e. HK$8,092 + HK$1,600 = HK$9,692).

28.  In so far as the children’s actual expenses are concerned it seems to me that the following are reasonable     

Children

Item	Amount
School fees	680.00
Extra tuition fees	N/A
School books and stationery	200.00
Transport to school	N/A
Medical / Dental	365.00
Extra Curricular Activities	2,000.00
Entertainment/presents	N/A
Holidays	N/A
Clothing/Shoes	2,000.00
Insurance premia	210.00
Lunches and pocket money	335.00
Other Transport	N/A
Child-mining fees	N/A
Uniform	N/A
Other (specify) – haircuts and phones	530.00
Total monthly expenses for children	HK$6,320.00

29.  I have not included in this schedule entertainment and presents or holidays as it seems to me that each parent should be responsible for those costs when the children are with them. I have also not included monthly savings for the children as it does not seem to me to be appropriate for the father to pay for this, especially given that his finances are so tight. Similarly, other items have been removed from the schedule including a parenting class fees for Tough love! In total then it seems to me that the relevant expenses for the children amounts to approximately HK$6,320 per month.

30.  In total then the expenses for the children amount to approximately HK$16,012 (i.e. HK$9,692 + HK$6,320 = HK$16,012) or just over HK$8,000 per child per month.

Can the father afford to pay this sum?

31.  It seems to me that the father should be able to afford this sum. Although I accept that his present financial situation is somewhat precarious I nevertheless have some sympathy with the wife on this. The father has an earning capacity and if his business and freelance activities are not going well, then he may have to look at other alternatives including other paid employment.  

Conclusion

32.  In conclusion then Order 1 contained in the court order dated the 18 July 2014 shall be varied to the extent that the Petitioner father shall pay periodical payments for the two children of the family, in the sum of HK$8,000 per month per child, until each child reaches the age of 18 years or ceases full time education, whichever is the later. Further Order 2 contained in the court order dated the 18 July 2014 shall be discharged.

Should this new figure be backdated?

33.  The order shall be backdated to the 1 May 2018 – i.e. the month after the father issued his application to vary.

Costs

34.  Given that neither party has been wholly successful, I shall make an order nisi to be made absolute in 14 days’ time that there shall be no order as to costs.

Further directions

35.  The mother’s judgment summons dated the 1 June 2018 shall be adjourned to the 24 July 2019 at 9:30 a.m. Both parties do personally attend that hearing.