JPH v. PK

FCMC 13429/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 13429 OF 2012

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J U D G M E N T
(VARIATION OF MAINTENANCE)

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1.  This is a hearing of the Petitioner (“the husband”)’s applications for:

(1)   the maintenance payable to the Respondent (“the wife”) and the children to be varied by way of discharge; and

(2)   his undertaking to pay the children’s tuition fees to be released.

2.  The wife opposed the applications.

Issues

3.  After hearing the parties’ evidence for 2 days, it is my view that the following issues need to be resolved by this court:

(1)   The medical conditions of the husband.

(2)   The husband’s spending on his music CDs.

(3)   The financial circumstances of the husband.

(4)   The financial circumstances of the wife.

(5)   Whether the maintenance payable by and the undertakings given by the husband should be discharged.

Background

4.  The parties were married in 1991.

5.  Within wedlock, they had 2 children:

(1)   Elder daughter, M, who was born in 1991 and is therefore 26 years of age; and

(2)   Younger son (“A”), who was born in 1993 and is therefore 24 years of age.

6.  The wife used to work for Cathay Pacific but retired sometime in 1996 to become a full time housewife in taking care of the children and the family.

7.  In 2003, the wife and the children were arranged to migrate and settle in Canada, which is the home country of the husband.

8.  The parties separated in 2004, after which the husband chose to stay in Hong Kong and worked as a private banker.

9.  In 2012, the husband petitioned for divorce on the ground of 2-year separation.  Decree nisi was granted on 7 January 2013, which was later made absolute on 14 May 2013.  The husband remarried his current wife on 25 June 2014.

10.  As far as ancillary relief is concerned, a settlement was reached and the terms were recorded in a consent order dated 15 April 2013 (“the AR Order”).  The AR Order was the result of a FDR hearing during which the following terms of settlement were agreed:

(1)   The wife undertook to continue to pay the mortgage of her property in Canada;

(2)   The husband undertook to pay for the children’s tuition fees for their tertiary education in Canada;

(3)   The husband should pay a lump sum of HK$250,000;

(4)   The husband should pay the wife periodical payment of CAD$5,000 per month during their joint lives, or until the wife’s remarriage or further order of the court; and

(5)   The husband should pay the children’s periodical payment of CAD$500 each per month until they each complete their present full time tertiary education.

11.  It is common ground that the younger son, A’s periodical payment has already ceased and the husband is no longer obliged to pay.

12.  Although the daughter, M was still studying her tertiary education during this hearing, there is little dispute that her present education would have completed in either March or April 2017.  In other words, by the time of the handing down of this Judgment, the periodical payment for M should have already ceased as well.

13.  There is no dispute that the husband has unilaterally stopped the payment of the wife and M’s periodical payments as from 1 August 2015, except on 17 October 2015, he paid M’s maintenance for August, September and October 2015 (CAD$500 x 3 months = CAD$1,500) and her tuition fee for the September to December 2015 term (CAD$3,091.74).  The husband still refused to pay the wife’s maintenance resulting in the wife issuing a judgment summons on 19 November 2015.

14.  After being served with the Judgment Summons, the husband issued his present summons for variation of the AR Order.

15.  At the call over hearing on 18 July 2016 and by virtue of Deputy Judge Susan Wong’s order, the husband had paid a sum of CAD$32,500 being half of the maintenance in arrears as from July 2015 to July 2016.

16.  It is the husband’s case that due to his deteriorating health and cessation of employment with the LGT Bank that he is no longer able to afford to pay the maintenance as agreed under the AR Order.  Therefore, he asks for his liability to pay maintenance and the undertakings to pay the children’s tuition fees to be discharged.  As the parties could not come to any agreement during the call over hearings, the case was therefore adjourned to today for trial.

The Legal Principles

17.  The Court’s power to grant an order for variation is governed by s11 (1) and (7) of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) which provides as follows:

“11. Variation, discharge, etc. of orders for financial provisions

(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section, the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.

….

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

According to the said provision, the court, in considering such an application for variation, has to consider all the circumstances of the case and in particular, any changes in the matters to which regard has been made in reaching the original order.

18.  In the case of AEM v. VFM[1], Cheung JA has explained the modern approach in dealing with such an application at paras 14.4-8 of the Judgment:

“4. The modern approach, as required by section 11(7), is for the Court to consider all the circumstances of the cases. The Court is not required to proceed from the starting point of the original order but look at the matter afresh: Flavell v. Flavell [1997] 1 FLR 353 at 357B following Lewis v. Lewis [1977] 1 WLR 409 and Garner v. Garner [1992] 1 FLR 573.

5. Any change in any of the matters to which the Court was required to consider when making the original order was one of the circumstances to be considered.

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.

7. An increase in the wealth of the husband was a relevant factor to be taken into account: Primavera v. Primavera [1991] 1 FLR and Cornick v. Cornick (No. 2) [1995] 2 FLR 490.

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] FLR 282.”

19.  As to the weight to be attached to the original order, Tang VP (as he then was) said in the case of HCTT v. TYYC [2008] 5 HKC 86 at paras 15-16:

“15. But as Garner v. Garner [1992] 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 payment 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 an order is not appealed against, or is made by consent, then the presumption must be that the order was correct when made. 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 changes in the 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.  Likewise, 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 older order as may be appropriate.”

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

20.  I shall bear the above principles in mind when I come to consider the facts of this case.

The Medical Conditions of the Husband

21.  The husband is now 62 years of age.  He said he had a number of serious medical issues including episodes of throat and neck cancer.  He was first diagnosed with cancer in February 2011 and had to go through a number of treatments both locally and in the US.  During treatment, the husband also suffered from other forms of illnesses including pneumonia resulting in his admission into the Intensive Care Unit of the Adventist Hospital.  He was informed that his kidneys, liver and pancreas had been severely damaged during the period when he had to undergo radiotherapy and chemotherapy. 

22.  According to the husband, he thought he could recover from those illnesses and therefore, he did not raise his health issues during the divorce proceedings in April 2013.  However, his health conditions continued to deteriorate thereafter and on 14 September 2015, he even suffered a stroke causing complete blindness in his right eye.  He was hospitalised again for treatment.  He said he still could not see properly from his right eye and the doctor advised that the condition was likely to be permanent.

23.  He said he used to be employed by the LGT Bank in the positions of Managing Director and Senior Relationship Manager since November 2014.  As a result of the medical procedures and his weakened health, he was unable to work in the office for a period of time.  Eventually, he had to retire from the bank on medical grounds.  In the notice of termination of employment issued on 3 June 2015 (B1/252), one would see that the husband’s last day of employment with the LGT Bank was 30 June 2015.

24.  The husband now claims that he is unable to continue with the payment of maintenance to the wife and M.

25.  Another area of concern of the husband is his future medical expenses.  According to him, the overall maximum benefits under his medical policy was only USD250,000 per year plus a ceiling for each disability.  In a letter and an email issued by Blue Cross on 9 and 10 February 2017 respectively, the husband’s application for reimbursement of his intended operation on his vocal cord was refused as the maximum limit per disability has already been exceeded.  In other words, it would not be possible for him to get further reimbursement for any future medical expenses connected with his throat and neck cancer.

My Views

26.  I think it is quite clear that the husband was and still is suffering from very serious medical conditions.  Such evidence can be seen from the various letters or medical reports exhibited by the husband in his supporting affidavits (B1/207-247, 253-254).  In a letter issued by Dr. Lam Wai Kit, Wayne of the Hong Kong Adventist Hospital on 28 December 2015, it was certified that the husband had suffered the following problems in the past 10 years:

(1)   Throat cancer – had resection and radiotherapy

(2)   Recurrent pneumonia

(3)   Deep vein thrombosis

(4)   Pulmonary embolism

(5)   Stroke

(6)   Right carotid artery stenosis

27.  In addition, he was recently diagnosed to have vocal cord nodules which also caused serious hoarseness in his voice.   The reimbursement for such medical expenses was turned down by his insurer as he has already exceeded the maximum limit per disability.

28.  By looking at the medical evidence as a whole, it is not difficult for this court to conclude that the husband is currently suffering from serious medical conditions, and together with his age (62), his ability to continue open employment, be it in the private banking sector or otherwise, is very much in doubt.

The Husband’s Music CDs

29.  I understand that it is the case of the husband that despite his inability to continue his career in the private banking business, he still has a genuine expectation that his long time talent in music (especially in guitar playing) could generate an alternative source of income in the future.   That was why he had invested about HK$2,700,000 to produce his own CDs in the past few years.

30.  During cross examination, Ms. Lam for the wife queried the genuineness of the husband’s payments for the production of the music CDs.  It seems to be her submissions that even if there had really been some payments being made to a witness called by him (“Mr. A”), those payments were fake in the sense that they were made for the sole purpose of reducing the current assets now stands in the name of the husband, trying to portrait him as a person of diminishing means.

The husband’s witness

31.  In support of his case, the husband has called Mr. A to prove that he has spent quite a substantial amount of his capital in the production of some music CDs hoping that the investment would produce some meaningful financial return for him.

32.  According to Mr. A, who is a music producer, he first met the husband sometime in 2010 who requested him to assist in the production of 16 songs written by the husband in the previous 25 years.  Despite the fact that the husband fell ill very shortly, a first recording was produced.  Mr. A said he quoted the price of HK$500,000 for the said production but the husband only paid up about $300,000.  The production was not yet completed before the husband left for the US for treatment.  The husband returned in about 2014 and requested Mr. A to help him to complete the project.  The new CDs did well and the husband decided to order 2 more.  The husband was charged by Mr. A at US$100,000 for his fees and the use of the music studio plus a further charge of HK$200,000 for the individual recordings.  He said up to the date of his affidavit (5 January 2017), the husband still owed him a sum of HK$300,000.

33.  Under cross examination, Mr. A stated that he had actually received about HK$2,700,000 from the husband and was expected to be paid an extra HK$300,000 if there were going to be songs added to the new CDs.

My views

34.  After hearing the husband’s evidence, which was supported by Mr. A, I am prepared to accept that the husband does have some talents in music, especially in guitar playing.  I accept that he may have a genuine intention to explore such potentials hoping that it might generate some financial benefits in return. This was supported by the fact that Mr. A, a professional music producer was engaged and some actual CDs were also produced (Exhibit P1).  I also accept that he has paid about HK$2,700,000 for such purpose so far.

35.  Despite all these good intentions of the husband, I am afraid that his subjective views on the matter actually lack a sense of realism.  Of course, I am not saying that the husband is not a good musician.  However, starting at the age of 62, and with all the physical disabilities that he is presently suffering, including his inability to sing due to the hoarseness of his voice and near blindness in one of his eyes, I think the chances of him being able to get a meaningful financial return from his music production is rather slim. 

36.  I fully appreciate that for some people when they come to a certain stage of life, it may be natural that they would like to do something of their own passions; or to fulfil some dreams previously not yet fulfilled; or simply to do something that they have missed when they were still young.  I trust that the husband must be one of those people.  However, all these have to be properly balanced against his financial duty towards his former wife and 2 children, to which he had just agreed in 2013, and which he had only honoured for about 2 years when he started to default payment in 2015. 

37.  Moreover, the magnitude of his financial investment in music is also an important consideration.   His total investment in music production amounts to about HK$3,000,000 (with HK$2,700,000 actually paid and HK$300,000 still owing) so far when his total assets as in January 2016 were only about $4,800,000.  Much of that investment was made when he well knew that his employment with the LGT Bank would not be continued.  On the other hand, the monthly maintenance for the wife was CAD$5,000, equivalent to about HK$29,000 per month.  If the husband should decide to use that “investment” amount to pay for the wife’s maintenance, that would be enough to cover at least 103 months.  This shows the unreasonableness of the husband’s so called investment in his music production, on which this court cannot condone.   Therefore, the fact that the husband has made such unreasonable investment in his music production will be taken into account when this court comes to the final decision on whether the AR Order should be varied.

The financial circumstances of the husband

38.  The more up-dated financial situations of the husband can be seen in his Form E sworn on 29 August 2016, which was filed about 9 months ago (A/138-164).  The husband described himself as a retired private banker which I do not think is being disputed.  The last day of his employment was 30 June 2015.  Despite such retirement and the end to a regular income for the husband, there can be little dispute that the husband had actually received the follow payments shortly before or after retirement:

(1) Father’s estate (USD127,498.06) (1.4.15)	HK$981,000 (about)
(2) From employer upon retirement (25.6.15) (salary, leave and long service payment)	HK$373,231.78
(3) Ex-gratia payment from employer (by 6 instalments from July to Dec 2015)	HK$960,000
(4) Company bonus for 2015 (1.4.16)	HK$873,135
(5) MPF benefits from AIA (29.6.16)	HK$319,018.71
(6) MPF benefits from HSBC (8.9.16)	HK$124,182.91
(7) Bonus 2016 (USD26,000) (March 2016)	HK$200,000 (about) HK$3,830,568.40

39.  The husband re-married his current wife on 25 June 2014 and together they have a very young daughter.  In §20 of his affidavit filed on 22 February 2016 (A/64), the husband set out his monthly expenses as follows:

Household Expenses	Amount
Rent	$15,000
Electricity	$2,000
Water	$700
Domestic helper	$6,000
Food and beverages	$16,000
Car	$1,600
Household domestic supplies	$1,000
TV and Wi-Fi	$700
Miscellaneous	$2,000 $45,000
Personal Expenses
Personal allowance	$15,000
Estimated tax liability	$10,000
Telephone bill	$600
Holidays with family	$10,000
Maintenance to [wife]	$47,400
Maintenance to M	$3,950 $86,950
Monthly expenses for current wife
Personal allowance	$6,000
Medical expenses	$300
Clothes (including accessories)	$3,000
Entertainment	$3,000 $12,300
Monthly expenses for daughter
School (incl. tuition, uniform, transport, etc)	$10,000
Piano lessons	$500
Gymnastic lessons	$900
Playgroups and ECA	$800
Medical expenses	$400
Clothing	$500
Entertainment	$1,500 $14,600 Total: $158,850

40.  During cross examination, there were clarifications on the items of “maintenance to [wife]” ($47,400) and “maintenance to M” ($3,950).  Despite there might have been some miscalculation in the exchange rate resulting in the rather unexplainable figures of $47,400 and $3,950, it has now been clarified that the husband is no longer paying those 2 figures, or any sums, on maintenance.  If they are taken out of the calculation, the husband’s monthly expenses now stand at about HK$107,500 ($158,850 - $47,400 - $3,950 = $107,500).

41.  As at 20 January 2016, the husband still had about $3,900,000 in his Bank of East Asia account and $900,000 in his HSBC Premier account, totalling $4,800,000 (A/67).  By 29 August 2016, he still had about $3,560,000 in his bank accounts (A/153, Form E) with a liability of about $874,215.65, giving him a net worth of about $2,800,000.

The financial circumstances of the wife

42.  The wife is now 59 years of age.  She said she gave up her career and became a full time housewife since 1996.  All along, the wife and the children depended on the maintenance of the husband.  According to her, it is now impossible for her to return to the labour market at her age, and especially after an absence of 21 years.  As a matter of fact, when the AR Order was made in 2013, it was never the parties’ intention that she would be required to take up open employment in the future.

43.  On the other hand, it is the husband’s case that the wife is younger than him and have a degree in business administration.  She did also work for the Cathay Pacific as a Chief Purser and should therefore be able to look for a job. Therefore, the wife should not continue to rely on the maintenance payable by him and that the AR Order should be varied accordingly.

My Views

44.  I accept that the wife is younger than the husband, but not that much younger (only by 3 years).  She is 59 years of age, and out of the work force for over 20 years.   I think it is unrealistic for her to return to her previous job as a Chief Purser of the Cathay Pacific or anything similar.  Her present grievance is certainly understandable as she entered into an agreement with the husband as late as 2013 (the AR Order) in which she was assured of a monthly maintenance of CAD$5,000, and on which the husband had only honoured for about 2 years. 

45.  Be that as it may, I think the wife also needs to be realistic about her own future financial arrangement.  The undeniable fact is that both parties are getting older and in view of the rapidly deteriorating health of the husband, it may not be too long before she has to find her own means to support herself financially.  It may be high time for her to seriously think about finding some form of employment, at least to supplement her income or save something for her own retirement in the not too distant future.

46.  In her Form E, the wife quantified her monthly needs as follow:

General
Mortgage instalment	$12,004
Utilities	$1,080
Management fees	$1,350
Food	$4,800
Household expenses	$600
Car expenses	$1,200
Others	$600 $23,614
Personal
Transport	$200
Clothing/shoes	$200
Personal grooming	$400
Entertainment/presents	$200
Holiday	$200
Medical/dental	$600 $18,000
Children
Transport to school	$600
Medical/dental	$1,200
Holidays	$500
Clothing/shoes	$200 $2,500 Total: HK$25,934

47.  I note that the wife’s monthly expenses were not seriously challenged at trial as it was obvious that her expenses were quite modest as compared to the husband’s monthly expenses.

48.  In her Form E, the wife stated that she owned a property in Canada in which she was living, with an estimated value of about HK$1,267,810, together with another piece of land in Thailand valued at about HK$400,000.  As to her other assets which included Canadian and Hong Kong bank accounts, the wife had another HK$134,012.  Therefore, the total assets that the wife is currently holding is about HK$1,800,000.

Whether the AR Order should be varied

Change of Circumstance

49.  It is part of the husband’s case that there has been a significant change of circumstance since the AR Order, namely the unexpected rapid deterioration of his health leading to the loss of his private banking job.

50.  The wife objected by saying that the husband’s neck and throat cancer was not something new.  The husband was diagnosed with the sickness back in 2011 meaning that such medical condition was already prevailing when the parties entered into the agreement on ancillary relief.  

51.  There may be some force in the wife’s argument, but I accept that back in 2013, after the husband had received the first round of treatment, the prospect of his recovery was rather promising.  Subsequent events proved that this assumption might have been over optimistic, but I accept that at the time of settlement, the husband did harbor such a genuine belief that his medical conditions would improve in the future and that was why he did not bring up his health issue when the parties negotiated for the settlement. 

52.  Under these circumstances, I am prepared to accept that the husband’s deteriorating health, though not an entirely new matter, can still be regarded as a circumstance that this court needs to take into account in considering whether the AR Order needs to be varied.

Unreasonable Spending on the CDs

53.  In the above discussion, I have already described how the husband has spent about HK$2,700,000 (with an additional HK$300,000 owing) of his limited fortune in the production of some music CDs, which he hoped would bring in some future income.  The project started sometime in 2011 and after 6 years, the reality is that no financial benefit has been obtained from his music.  In my view, the chances of the husband having any future income from this source is also minimal.  In other words, the husband has willfully wasted a substantial portion of his already limited resources on his music, which could have paid for many years’ maintenance for the wife.  This fact would mitigate against a reduction of the husband’s liability in maintenance payment. 

The Husband’s Refusal to Pay Maintenance

54.  Another aspect of the case that needs to be seriously considered is the husband refusal to pay maintenance despite he still has the means to comply with the court order. 

55.  It is quite clear from the evidence that despite the claim of financial predicament, the husband should have received an aggregated sum of about HK$3,830,568.40 since the end of June 2015 which was more than enough to satisfy his liability under the AR Order (the total maintenance payable for the entire period from July 2015 to June 2017 is CAD132,000).  Nevertheless, he chose to default on the payments.  Moreover, at the hearing, when he was confronted with the fact there was no attempt to reduce his spending, the husband simply said that he was not going to change the way he lived and that if he had used up all his money, he would simply go back to Canada.  This shows the husband’s total disregard of his liability under the AR Order.

Conclusions

56.  After considering all the circumstances of this case, in particular, the diminution of the husband’s already limited capital due to his unreasonable spending on his CDs and the refusal to pay maintenance despite he still has the ability to do so, there are strong arguments in favour of refusing the husband’s application for variation.  However, there are also indisputable facts that cannot be ignored, including the advancing age and deteriorating health of the husband, his loss of employment and his new responsibilities towards his new wife and child, I do accept that the reality may justify a downward variation of the AR Order, but not a total discharge of the husband’s liability.  Having said that, I think it is also necessary to give the wife some time for adjustment so that she could re-enter the labour market sometime in the future. In this regard, I am prepared to allow a downward adjustment of 50% in 12 months’ time.

57.  As to the maintenance and undertakings for the children, there is no dispute that all maintenance and undertakings in favour of the son, A should end.

58.  As to the maintenance and undertakings for the daughter, M, I note that M would have finished her full time education by now and even if there was any maintenance owing, that should not be a very big amount.  Therefore, I am not prepared to order any variation of M’s maintenance or any financial undertakings given by the husband concerning her.

Orders

59.  Based on the above reasons, the AR order is to be varied as follows:

(1)   All maintenance and undertakings in favour of A are to be discharged or released as from the date of the husband’s summons for variation, namely 19 February 2016.

(2)   The husband’s application for the discharge or release of the maintenance or undertakings concerning M is refused.

(3)   The maintenance order in favour of the wife is to be varied downward to a monthly sum of CAD$2,500 starting from 1 July 2018.

Costs

60.  Costs to follow event.   The wife should have the costs of the application, including all costs reserved, with certificate for counsel, such costs to be taxed if not agreed.  This will be in the form of an order nisi to be made absolute after the expiry of 14 days from the handing down of this judgment.