TMM also known as MMJT v. CCY also known as CCYJ

FCMC 10961 / 2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 10961 OF 2010

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J U D G M E N T
(Variation of maintenance)

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Introduction

1.  This is an application by the Petitioner husband to vary the court order dated the 13 February 2012. He wishes to vary the maintenance payments down from US$2,500 for the wife and the two children of the family (i.e. US$7,500 per month in total) to US$1,000 per for the wife and the two children (i.e. US$3,000 in total). This application is dated the 4 March 2013 – just over a year after the original consent order was made.  However during the trial he said that he could only afford to pay US$1,300 per month in total (i.e. approximately HK$10,000 per month). In addition to the husband’s application to vary the wife has issued at least two judgment summonses. Others may follow. As is normal in situations like this the husband’s Notice of Application to vary will be dealt with first. The wife’s applications for a judgment summons will be adjourned to be dealt with at some future date.  

Background to the litigation

2.  The parties married in December 1992 and on the 23 August 2010 the wife issued a divorce petition based on two years separation. There are two children of the family, both girls, CTKN who was born in May 1994 and who is now 19 years of age and attending Community College in the States and CTLM, who was born in July 2000 and is therefore 13 years of age and attending school in the States. The decree nisi was pronounced on the 20 November 2010 and the decree absolute on the 24 February 2012.

3.  On the 7 February 2012 the parties entered into a consent summons with respect to their finances. It is an extremely detailed agreement. Both parties were legally represented at the time. It covers all aspects of the parties’ financial relationship. The parties owned three properties – “the Junction Road property” in Hong Kong, the “US property” in California and the “Cable TV Tower Property” in Hong Kong. The US property is the wife’s home. The agreement in essence was that no further encumbrances should be taken out on any of the properties save for the existing mortgages. Both Hong Kong properties were to be sold and the net proceeds of sale used to pay off those mortgages, and other various loans. The US property was to be transferred to the wife. In particular it was agreed as follows:

(J) they [the parties] shall endeavour to sell the Junction Road Property as soon as reasonably practicable after the granting of the Decree Absolute at a price to be agreed between them and the entire amount of the net sale price (i.e. the sale price less the legal costs and expenses attending such sale up to a cap of HK$10,000.00 for each party and the agency fee not exceeding 1% of the sale price) (“the Net Sale Price of the Junction Road Property”) shall be paid to the Petitioner’s Solicitors as stakeholder and the Petitioner shall direct her Solicitors to apply the same in the following order of priority:-

(1) to pay to the Petitioner a sum of US$420,000.00;

(2) to pay a sum of HK$1,800,000.00 (or HK$1,500,000.00 if and only if the amount mentioned in Paragraph (O)(1) of the Undertakings hereinbelow has already been paid out of the Net Sale Price of the Cable TV Tower Property (as hereinafter defined)) to the Petitioner’s mother in settlement of the loan owed to her by the Respondent, and the said sum shall be paid to the Petitioner’s mother through the Petitioner;

(3) to pay all the legal costs and disbursements incurred by the Petitioner in the divorce suit, the custody and the ancillary relief proceedings (including maintenance pending suit application) and the costs of and occasioned by the application by way of the Consent Summons (irrespective of the costs orders previously made in these proceedings) to Messrs T.H. Koo & Associates subject to a cap of HK$250,000.00 if and only if the same has not yet been paid out of the Net Sale Price of the Cable TV Tower Property;

(4) to pay all the legal costs and disbursements incurred by the Respondent in the divorce suit, the custody and the ancillary relief proceedings (including maintenance pending suit application) and the costs of and occasioned by the application by way of the Consent Summons (irrespective of the costs orders previously made in these proceedings) to Messrs Howell & Co. subject to a cap of HK$250,000.00 if and only if the same has not yet been paid out of the Net Sale Price of the Cable TV Tower Property;

(5) subject to Paragraph (J)(6) hereinbelow, to pay to the Respondent, on a reimbursement basis (i) a sum equivalent to the Redemption Money (as hereinafter defined) which the Respondent has paid to Standard Chartered Bank (Hong Kong) Limited (“SCB”), (ii) a sum of HK$300,000.00 as specified in Paragraph (O)(1) of the Undertakings hereinbelow and (iii) the legal costs and disbursements incurred by the Petitioner and the Respondent as specified in Paragraphs (O)(2) and (3) of the Undertakings hereinbelow, if and only if the latter two (i.e. (ii) and (iii)) have already been paid out of the Net Sale Price of the Cable TV Tower Property pursuant to Paragraphs (O)(1), (2) and (3) of the Undertakings hereinbelow;

(6) the remaining balance of the sale proceeds (i.e. after deduction of the amounts set out in Paragraphs (J)(1) to (J)(5) above), if any, shall be shared equally between the parties PROVEDED THAT the amount specified in Paragraph (J)(5) above and the Respondent’s half share of the said remaining balance shall be paid to him if and only if the following sums have been deducted therefrom and paid to the Petitioner:-

(i) the sum of HK$130,000.00 in settlement of the loan owed by the Petitioner to the Petitioner’s mother and brother as specified in Paragraph (O)(4) of the Undertakings hereinbelow if and only if the same has not yet been paid to the Petitioner out of the Net Sale Price of the Cable TV Tower Property;

(ii) a sum of US$10,500.00 in settlement of the loan owed by the Petitioner to her neighbours as specified in Paragraph (O)(5) of the Undertakings hereinbelow if and only if the same has not yet been paid to the Petitioner out of the Net Sale Price of the Cable TV Tower Property;

(iii) all the outstanding maintenance pending suit/interim maintenance/ periodical payments, education, medical, dental and leisure trips expenses due by the Respondent to the Petitioner and the Daughters and all the outstanding monthly mortgage repayments of the US Property payable by the Respondent from the month of August, 2011 including without limitation all those due under the Order dated 23^rd August, 2011 and this Order, if any;

(iv) the costs and disbursements (including without limitation legal costs, government taxes and duties, if any) incidental to the transfer of the properties and vehicles as specified in Paragraph (O)(7) of the Undertakings hereinbelow if and only if the same has not yet been paid out of the Net Sale Price of the Cable TV Tower Property;

(v) the hire purchase loan instalments of the vehicle Volkswagen Jetta (US Vehicle Registration No. XXX-XXX) which has been paid by the Petitioner from 1^st August, 2011 up to the date of completion of sale of Junction Road Property and the outstanding hire purchase loan of the said vehicle as at the date of completion of sale of the Junction Road Property if and only if the same has not yet been paid out of the Net Sale Price of the Cable TV Tower Property;

(vi) the outstanding mortgage/loan of the time sharing property/resort hotel membership referred in Paragraph 6(c) of this Order as at the date of completion of sale of the Junction Road Property if and only if the same has not yet been paid out of the Net Sale Price of the Cable TV Tower Property; and

(vii) the lump sum payment of HK$200,000.00 to the Petitioner referred in paragraph 7 of this Order;

PROVIDED FURTHER THAT if the amount specified in Paragraph (J)(5) above and the Respondent’s half share of the said remaining balance are insufficient to pay the amounts specified in Paragraphs (J)(6)(i) to (vii) above, the Respondent shall at his own resources pay the shortfall to the Petitioner within one month from the completion of the sale of the Junction Road Property or of the sale of the Cable TV Tower Property, whichever is the later and in any event within 12 months from the date of the Decree Absolute in respect of the amounts specified in Paragraphs (J)(6)(i) to (vi) and within one month from the completion of the sale of the Junction Road Property in respect of the lump sum payment specified in Paragraph (J)(6)(vii);

FURTHER PROVIDED THAT the Petitioner’s half share of the said remaining balance shall be paid to her only after her share of the Costs of the High Court Actions was deducted therefrom and paid to the Respondent pursuant to Paragraph (L) of the Undertakings hereinbelow; and

(7) the amount payable under Paragraphs (J)(2), (J)(6)(i) and (J)(6)(vii) above shall be paid into the Petitioner’s Account No. XXX-XXX-X-XXXXXX-X maintained with Bank of China (Hong Kong) Limited (“the Petitioner’s BOC Account”) whereas the amount payable to the Petitioner pursuant to Paragraphs (J)(1), (J)(6)(ii), (J)(6)(iii), (J)(6)(iv), (J)(6)(v) and (J)(6)(vi) above shall be paid into the Petitioner’s Account No. XXX-XXX-XXXX maintained with First Bank, U.S.A. (“the Petitioner’s First Bank Account”), both within 7 days from the date of completion of sale of the Junction Road Property;

4.  Unfortunately the Junction Road property was not sold in a timely manner as had been agreed. On the 18 October 2012 the wife issued an application for a judgment summons. At that stage she complained of non payment of the mortgage payments on the US property, non payment of the periodical payments and other sums. As a result of this the bank in the US took steps to foreclose the US property. On the 26 April 2013 the wife issued a summons seeking an order for sale in relation to the Junction Road property. On the 6 May 2013 an order was made inter alia as follows:

3. the property situate at X Floor, No. XX Junction Road, Kowloon, Hong Kong (“the Property”) be sold by public auction or private contract at a price of not lower than HK$8,100,000;

4. the Respondent do within 45 days from the date hereof deliver or procure the delivery of vacant possession of the Property to the Petitioner or her agent;

5. the Petitioner or her agent shall have the conduct of sale of the Property;

6. the sale proceeds of the Property after deducting (i) the legal costs and expenses in attending such sale up to a cap of HK$10,000 for each party, (ii) agency fee or auctioneer’s remuneration of not exceeding 1% of the sale price, and (iii) the valuation fee of HK$4,000, shall be paid into the Court pending final determination of this matter;

5.  Unfortunately the property was not sold as ordered and funds were not paid into court. The situation deteriorated further. The wife was able to settle some of the outstanding mortgage arrears up until February 2013 by borrowing some money and also liquidating some shares. However the situation remained critical. On the 17 June 2013 a further order was made as follows:

1. Paragraph 6 of the Order made by Her Honour Judge Melloy on 6^th May, 2013 be varied in the following manner:-

“the sale proceeds of the property situate at X Floor, No. XX Junction Road, Kowloon, Hong Kong (“the Property”) shall be distributed in the following manner:-

(a) The initial and further deposits, representing 10% of the selling price of the Property shall be paid to the Petitioner forthwith upon receipt of the same from the purchaser; and

(b) The balance of the selling price, representing 90% of the selling price of the Property, after deducting (i) the legal costs and expenses in attending such sale up to a cap of HK$10,000 for each party, (ii) agency fee or auctioneer’s remuneration of not exceeding 1% of the sale price, and (iii) the valuation fee of HK$4,000, shall be paid into the Court pending final determination of this matter”              

6.  On the 20 Jun 2013 the selling price of Junction Road was amended to HK$7,680,000. A purchaser was eventually found for the Junction Road property for HK$8.1 million and completion took place on the 13 August 2013. Unfortunately this did not stop the foreclosure of the US property. Luckily the wife was able to negotiate with the new owners to buy the property back – which she did for US$460,000. Thus on the 5 August 2013 an order was made by consent as follows:

1. Paragraph 6 of the Order made by Her Honour Judge Melloy on 6^th May, 2013, as varied by the Order made by Her Honour Judge Melloy on 17^th June, 2013, be further varied in the following manner:-

“the sale proceeds of the property situate at X Floor, No. XX Junction Road, Kowloon, Hong Kong (“the Property”) shall be distributed in the following manner:-

(a) The initial and further deposits, representing 10% of the selling price of the Property shall be paid to the Petitioner forthwith upon receipt of the same from the purchaser;

(b) A further sum of HK$2,934,000 shall be paid to the Petitioner out of the balance of the selling price of the Property upon completion of sale and purchase of the Property; and

(c) The residue of the selling price of the Property after deducting (i) the legal costs and expenses in attending such sale up to a cap of HK$10,000 for each party, (ii) agency fee or auctioneer’s remuneration of not exceeding 1% of the sale price, and (iii) the valuation fee of HK$4,000, shall be paid into the Court pending final determination of this matter.”

7.  The sum of HK$4,251,000 is presently held in court pursuant to that order. Some interest will also have accumulated on that sum, but at the time of writing this judgment that figure was unknown.     

8.  The husband is a businessman who originally had a small company called C Limited that was involved in the selling of business supplies including refill copier toners. According to the wife the husband developed the business from quite humble beginnings into a relatively successful company. The husband’s involvement in this company came to an end in June 2012. Since then he has held a number of positions, including working part time for an independent distributor in a multi level marketing company. He has also recently taken insurance agent exams and he is now working on a commission only basis as an insurance agent.

9.  The wife for her part is a housewife. She does not work outside the home and has not done so for a considerable period of time. She trained to be a beautician prior to marriage but did not complete the apprenticeship. She is educated up to secondary level. She says in her most recent Form E that she assisted the husband with the business during the marriage. 

The issues

10.  The real difficulty in this case is in ascertaining whether or not the husband has truly fallen on hard times as claimed and whether there has been a material change of circumstance since the original consent summons was entered into. If so is he able to pay the maintenance as ordered? If not is his earning capacity and other financial resources such that an order to vary downwards should not be entertained in any event? The only issues then are whether or not the maintenance should be reduced to either US$3,000 or to US$1,300 per month or indeed to some other figure and secondly whether or not this sum should be backdated?

The law 

11.  The husband’s application to vary 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 ……”

12.  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 fettered 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 3.131 Jackson’s Matrimonial Finance and Taxation, 7^th edition). It is also true that there would normally be a reason for the application to vary or what some might call a “trigger”.

13.  As pointed out by counsel for the wife the parties also have a duty to make full and frank disclosure of their means and a failure in that duty can lead the court to draw an adverse inference – if indeed that is relevant on the facts. (See Baker v Baker [1995] 2FLR 829).

14.  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).

Recent case law

15.  In the most recent Court of Appeal decision on variation – WNWG v PBF – [2012] HKCU 675, these basic principles were reiterated. The Hon Lam J said that:

[12] As regards the approach that the court should adopt in considering an application for variation and the weight to be attached to the original order, Tang V-P said in HCTT v TYYC [2008] 5 HKC 86 at paras 15 to 16,

“15. But as Garner v Garner [1992] 1 FLR 573 shows that does not mean that the earlier order, whether made by consent or not, carries no weight. How much weight should be given to the earlier order must depend on the circumstances. Cazalet J said in the English Court of Appeal:

“Almost invariably, an application to vary an earlier periodical payments order will be brought on the basis that there has been some change in the circumstances since the original order was made, otherwise, except in exceptional circumstances, the application will, in effect, be an appeal. If it was correct when made, then there will usually be no justification for varying it unless there has been a material change in the circumstances. However, because of the impact of continuing inflation, because children grow older and cost more to support and because, for example, the cost of living in its increase may hit one party harder than another, it will usually follow that, if time has passed, there will inevitably have been some changes in the circumstances, and in particular in the financial circumstances, of the parties concerned.

Following Lewis v Lewis, by which decision this court is bound, a court on the hearing of an application to vary is fully entitled to look at all the relevant matters set out in s. 25 of the Matrimonial Causes Act 1973.  On occasions, the court may be slow to accede to an application to vary a consent order, not least because the parties’ solicitors might otherwise be deterred from either seeking to negotiate such a provision or to achieve finality.  Another factor which may influence a court will be the time that has passed since the original order was made.  If an application consequent on an order is brought very soon after that order has been made, the court, in normal circumstances, is likely to attach more weight to the earlier order than if it had been made some years previously. Like-wise, the court would expect to pay full regard to any special terms agreed between the parties at the time the original order was made – as, for example, when endorsements on briefs or contemporaneous correspondence show that an agreed order has, for some particular reason, been set at an artificially low figure.  Shortly stated, the court must decide what weight it should attach to the original order and all the surrounding circumstances. However, once an application to vary is before it, the court is fully entitled to make an order considering all the circumstances afresh, paying such regard to the old order as may be thought appropriate.”

16.  Thus, although the jurisdiction to vary is untrammeled, normally the earlier order would not be varied unless there has been a material change in circumstances.”

[13] And further at para 37, His Lordship said,

“Justice requires that proper weight should be given to the consent order.”

[14] Though the emphasis may be slightly different, Cheung JA was of the same view in AEM v VFM [2008] 3 HKLRD 36, at para 14, in particular at sub-paras 6 and 8,

“6. Almost invariably, an application to vary an earlier periodical payment order will be brought on the basis that there has been some changes in the circumstances since the original order was made, for example, continuing inflation, the increased costs in supporting a growing child and that one party may be more adversely affected than another by the increase in the costs of living: Garner v Garner.

8. At the same time the basis and intended effect of the original order are relevant factors to which the court on variation should pay regard and there should not be a radical departure from the approach taken by the parties themselves when they had entered into an agreement embodied in a consent order: Boylan v Boylan [1988] 1 FLR 282.”

16.  In this instance the husband was asking to vary an order for maintenance for the three children of the family entered into between the parties by consent following a successful mediation, because of his change of employment. He was asking that the maintenance payments be varied downwards. In that case, there was a clean break between the parties and the husband had been almost wholly responsible for the children‘s maintenance previously. That is not the case here. The Judge at first instance had allowed a variation downwards. This was overturned on appeal.

[29] Should the cessation of employment alone be a sufficient justification for the exercise of the court’s power of variation despite the underlying the approach taken by the parties when they had entered into the agreement for maintenance of the children in light of the wide disparity in earning capacity? With respect to the learned Judge, this is the central issue in the present case which he had failed to consider. Had the Judge directed his mind to this question before embarking straight onto the question of reasonable apportionment at para 47 of the judgment, he would have appreciated that despite the cessation of the employment the Respondent (given his age, qualification and experience) remains a person of high earning capacity whilst the Petitioner would continue to be a full-time mother depending on the lump sum payment for her maintenance in the years to come. He would have also appreciated that notwithstanding that his employment was terminated by his employer, it was the Respondent’s personal choice not to enter into the employment market again and, according to his finding, such choice had not been endorsed by the Petitioner.

Backdating the order

17.  In so far as the issue of backdating is concerned – reference can be made to the 18^th edition of Rayden which states as follows:

Backdating

18.25   … Where a variation downwards is being considered, there may be cases where the delay between the event which justifies the variation and the issue of the application to vary makes it just for the variation to be backdated to the date of the triggering event such as a permanent loss of employment or a business going into receivership.

Each party’s case

The husband’s case

18.  In essence the husband says that he has fallen on hard times, that his business has been transferred to a former business partner and that he has reinvented himself as an insurance agent. He hopes to make more money in the future and he is looking at other business opportunities – but at present he cannot afford to pay more than US$1,300 per month. This is reiterated in his closing when he said as follows:

This is my final submission which is supported by the evidence at trial.

1. On Jan 19, 2012 my company C Limited, me and the petitioner were sued by Standard Chartered Bank (SCB) for a mortgage loan.  In April I was forced to sell the Cable TV Tower office to settle the loan due to SCB.  Part of the money was used to pay the legal fees for both petitioner and me and the balance of HK$1.1 million was all paid to the petitioner.  I received nothing.

2. Without any running capital to operate the company, my business was in a dire strait.  I was unable to pay my suppliers and salaries to my staff etc., no suppliers gave me any more credit and chased me for payment.

3. In July 2012, I invited a business partner whom I owed him money to take over C Limited and I became a consultant of the company in order to keep the company survive.

4. I surrendered some of my insurance policies, pawned my watches and borrowed money from partner to pay the salaries and MPF of my staffs before the handover and remitted to the petitioner to pay the mortgage and tuition fee of N etc. I only received a small amount of bonus from my partner since then.

5. My income was basically from commission from some Multi-Level-Marketing companies, it was not enough for my own living.  Since then I have been helped out financially by my girl friend whom I met in early 2012. In Jan 2013, I joined X Life Insurance Company and become a full time insurance agent and had passed four out of five examinations for the professional license.  For the past ten months, I am able to earn an average income of about HK$32,000.00 per month which is about US$4,100.00.

6. I also looking for opportunities to make more money and partners in two companies called G & H in late 2012. However, due to serious deviation about the business, I quit as a director of G and keep sole proprietor of H.  No business transaction ever made for both companies since the operation.

7. This July I sold my Junction Road apartment and bought the house in USA for the petitioner, now I am living alone in a small apartment in Tai Po Lam Tsuen at $11,000.00 per month.  My mother passed away a few months later after moved out from the Junction Road old house.

8. In reality, the petitioner owns a house valued over US$450,000.00, a time share apartment over US$30,000.00 in Colorado, driving Mercedes Benz and making money from speculating in stock exchange market.  And I am working more than 16 hours a day, using public transportation and living in a rented apartment.  My life style had a big change since the last four years.  I am not escaping from my responsibility as a father, but the reality is that my earning is far below from before.

9. I pledge to your Honour that I am willing to pay 1/3 of my income which is about HK$10,000.00 or US$1,300.00 to the petitioner as maintenance.  I strongly suggest the petitioner sell the current house and buy two smaller one which one for living and one for renting, or buy a smaller one for living and use the rest of the money for investment that she is good at.  If my income ever improved in the coming future, I will increase the maintenance according to actual situation.

10.  For the balance after selling of Junction Road property, I would like to keep HK$2 million and the rest which is over HK$2 million to the petitioner, I need the money to settle debts I owe my friends and suppliers, also I can use it for investment or buy back some shares of F Ltd.

The wife’s case

19.  The wife for her part says that the husband should not have entered into the consent summons if he knew that he would not be able to comply with its terms. In essence she does not believe the husband. She does not accept that there has been a substantial change of circumstance sufficient to justify a variation of maintenance and she does not believe that the husband has made full and frank disclosure of his means. She wishes the order to be upheld and for the husband to be ordered to pay in accordance with the original consent summons. She says that this is also in keeping with the level of support provided to her by the husband prior to the separation.    

The parties

20.  The wife is nearly 45 years old. As I have said she is a full time housewife and does not work, although the husband maintains that she speculates in stocks and shares. She moved to the US with the girls in June 2006 by agreement and according to the divorce petition the parties separated in April 2008. This was then a relationship of approximately 16 years duration, the parties having married in December 1992.

21.  The husband is 53 years of age and on his case has fallen on hard times. As set out above he currently works as an insurance agent with a variable income on a commission only basis. His situation can be distinguished from that identified in WNWG v PBF – [2012] HKCU 675 because he does not have a clearly identifiable earning capacity. Nor has he chosen not to return to a well paid position. Rather he is doing everything within his power to maximize his earning potential. The husband is an entrepreneur by nature and on occasions his efforts have reaped significant success and on others rather less so.    

Should the maintenance be reduced to either US$3,000 or to US$1,300 per month or indeed to some other figure and secondly should this order be backdated?

Has there been a substantial change of circumstance?

22.  The wife maintains that the husband’s income has not substantially changed. She refers to the husband’s first Form E dated the 4 December 2010 where he states that his income was HK$55,000 per month and compares this to the disclosure in his Form E dated the 18 March 2013 where he states that his total income was just over HK$41,000 per month. According to the husband’s most up to date information his income was in the region of HK$55,000 per month – in other words his income was substantially the same as before.

23.  The difficulty with this argument however is that given that I may now consider this matter de novo – how is it possible to make an order that the husband pay more than he is actually earning – if what he says is true? US$7,500 is equivalent to approximately HK$58,500 per month. In addition the husband undertook to pay a number of other items including the mortgage on the US property. On the face of it the husband must have originally earned more than the HK$55,000 per month claimed given that the wife admits that the husband paid her about the same as the court order of the 13 February 2012 prior to the divorce i.e. somewhere in the region of US$11,200 per month.

24.  In his opening the husband said that there had been a big drop in his income over the last few years and that this was linked to the failing of the C business brought about by the recalling of the loan with Standard Chartered Bank.

25.  If one goes back to the husband’s original disclosure for assistance and one analyses the bank accounts attached to his first Form E for the year 2009, one can see deposits being paid into his HSBC account no XXX–X–XXXXXX as follows:

January 2009	HK$135,169
February 2009	HK$179,376
March 2009	HK$180,677
April 2009	HK$136,246
May 2009	HK$282,377
June 2009	HK$105,558
July 2009	HK$113,496
August 2009	HK$141,797
September 2009	HK$480,785
October 2009	HK$304,897
November 2009	HK$143,783
December 2009	HK$159,789
TOTAL	HK$2,363,950

26.  This equates to just under HK$200,000 per month – which is what the husband said his monthly expenses were originally.

27.  Although I would accept that there is no evidence before the court with respect to the source of those deposits, this is nevertheless indicative of the husband’s financial position a year or so before the divorce petition was issued.

28.  Thus on the balance of probabilities I am inclined to accept what the husband says in this respect – namely that his income has dropped significantly and there has been a significant change in his financial circumstances.

29.  The husband produced statements from X Life Insurance with respect to the commissions that he has earned since January 2013. The wife submits that I should not rely on this information, that it is not substantiated by any bank statements or passbooks and that the information is incomplete. With respect I beg to differ. There is a duty on both parties to provide ongoing financial disclosure. This is what the husband has tried to do by producing the X statements. I would accept however that the information contained in the bank passbooks is more reliable. This confirms that the husband received commission of HK$124,498.78 for the three months from January – March 2012 or c HK$42,165 per month. I also accept that he received some commission from A Products and I would also accept the calculation produced by the wife’s counsel in her closing which estimates that the husband received on average just over HK$5,670 per month from this source during the period covers from February – June 2012. The wife accepts the husband’s estimate that in addition he received just over HK$7,200 per month for commission from F – making a total of approximately HK$55,035 per month. In his Form E the husband claimed to be earning in the region of HK$41,213.45 per month. Thus there is a discrepancy of just under HK$14,000 per month. Notwithstanding that as I have said above I accept that the husband is now earning a lot less than before. This is probably why the husband was able to afford to pay the wife in the region of US$11,200 per month for the year October 2009 – October 2010.    

Has the husband failed to make full and frank disclosure of his means?

30.  The wife argues that the husband has not made full and frank disclosure of his means. In particular she refers to the following:

56.1.  His directorships in two HK companies;

56.2.  H’s shareholdings in two HK companies;

56.3.  H’s engagement and the honeymoon in July 2012; and

56.4.  The alleged takeover of the office supplies and stationeries business of C Ltd by Mr Z.

31.  Having heard evidence from Ms L, I accept the husband’s explanation in relation to items 1 and 2. I do not believe that there has been any deliberate non disclosure on the husband’s part in relation to these two matters. In any event I accept that neither the directorships nor the shareholdings in the companies are worth anything of any note.

32.  In so far as point 3 is concerned, it seems to me that this is a non starter. I accept that the husband is not engaged and that he did not go to California for his honeymoon. This also seems to me to be irrelevant to the issues in hand in any event.

33.  With respect to point 4 I accept the husband’s explanation with respect to the takeover of the supplies and stationery business. I don’t believe that there are any hidden assets here. 

Conclusion                                  

34.  In conclusion I accept that there has been a change of circumstance sufficient to justify a variation of the court order. The difficulty is that that could leave the wife and the two children in a very precarious financial situation.

35.  The husband originally offered US$3,000 per month in total which he then reduced to US$1,300 in total – or 1/3 of his alleged income at present. He suggests that the wife should sell the US property and buy a smaller property and either invest the rest of the funds or buy another property that can be rented out to provide an income. Even if the wife were to do this it will take time for her to reorganize her financial affairs.

36.  The wife says that she needs just over US$18,000 per month. However she originally accepted US$7,500 plus an undertaking with respect to the then mortgage repayments – which equates to just over US$10,800 per month – which is slightly less than the US$11,200 that she says she was receiving prior to the separation. With some economizing it seems to me that the wife should be able to manage on a lesser sum – although I appreciate that this will not be easy and that she may need to reorganize her finances in some way so as to ensure that she has some additional income.

37.  In so far as the wife’s earning capacity is concerned – I accept that this is quite limited. However she will need to do everything within her power in order to ensure that she maximizes her ability in this respect. 

38.  Although I accept that the wife needs to continue to receive financial support for herself and the children, I also accept that the husband is not in a position to pay that sum at present. It seems to me though – that again by putting stringent measures in place that he should be able to afford US$3,000 per month – i.e. US$1,000 per month each for the wife and two daughters.         

Should the variation of maintenance be backdated?

39.  The wife asks that I not backdate the variation, the husband urges me to do so. The husband issued his application on the 4 March 2013. I have a wide power in this respect and the objective, as far as possible in a situation like this, is to try to achieve a fair outcome. I have therefore decided not to backdate the new order. I think to do so would place an intolerable burden on the wife’s shoulders. In coming to that decision I am also cognizant of the funds presently held in court. Consequently the new order will take effect from the 1 February 2014.   

Order 

40.  In conclusion I will make an order in the following terms:

1) Order 1 contained in the court order dated the 13 February 2012 shall be varied to the extent that the monthly maintenance figure shall be reduced from US$2,500 per month to US$1,000 per month and order 2 shall be varied to the extent that the monthly maintenance figure of US$2,500 for each of the two children shall be reduced to US$1,000 for each, until each child shall attain the age of 18 years or cease full time education such orders to be effective from the 1 February 2014.

2) There shall be a call over in relation to the Petitioner’s judgment summonses on the 18 March 2014 at 9:30 am.

3) Both parties do personally attend that hearing.

4) Given that neither side has entirely won nor entirely lost this application I shall make an order nisi that there be no order as to costs, such order to be made absolute at the expiration of 14 days.