MYPC v. CWH

CAMP 512, 515 & 516/2021

[2022] HKCA 349

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 512, 515 & 516 OF 2021

(ON AN INTENDED APPEAL FROM FCMC NO. 8147 OF 2014)

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D E C I S I O N

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Hon Cheung JA (giving the Decision of the Court) :

I. Background

1.  The petitioner (referred to as the Mother in the Court below) and the respondent (referred to as the Father in the Court below) are former husband and wife.  The Mother was 51 and the Father 53 at the time of the hearing below.  They were married in 1996 and divorced in 2014.  They have two children born in 2003 and 2009 respectively.   The Family Court, pursuant to the settlement by the parties, ordered by consent on 26 August 2014 that joint custody of the children be granted to the parties with care and control to the Mother and defined access to the Father (‘the 2014 Order’).  This order also made provisions for ancillary relief, the major terms of which are :

1)  A property in Shanghai (‘Shanghai Property’) be sold and the net sale proceeds be divided and distributed to the Mother and the Father in the proportion of 60.7% and 39.3% respectively.

2)  The Father shall pay a lump sum of HK$1 million to the Mother and HK$18,000 as maintenance from his pension when he retires.

3)  The Mother shall pay a lump sum of HK$300,000 to the Father.

4)  The Father shall pay for the school fees of the two children in addition to the monthly maintenance.

5)  The Father shall pay HK$23,100 as the monthly maintenance for the Mother.

6)  The Father shall pay HK$23,000 as the monthly maintenance for each of the children, making a total of HK$46,000 per month for the children.

7)  Monthly maintenance for the Mother and the children shall be increased annually in accordance with the same percentage of the annual civil servant pay for civil servant of directorate band announced by the HKSAR government.

2.  In July 2016, the Shanghai Property was sold, with the sale proceeds distributed according to the 2014 Order, with HK$4.56 million to the Mother and HK$3.1 million to the Father.

3.  In September 2016, the Mother bought the property she is now residing at with the children in Tai Kok Tsui (‘HG Property’) at about HK$7.1 million, with downpayment of HK$3.55 million and a mortgage of the remaining amount.

4.  Between September 2016 and July 2017, the Father bought nine properties : one in Hong Kong, five in Bangkok and three in the Mainland.  In August 2017, the Father remarried.  A child was born of this marriage in February 2020.

5.  On 28 March 2018, the Father issued an application to vary downwards the maintenance payable to the Mother and the children.  He asked for the monthly maintenance for the Mother to be reduced from HK$23,100 to HK$10,000 (later further decreased to $5,000) and for each of the children to be reduced from HK$23,000 to HK$15,000 (i.e. a total of HK$30,000 for the children).

6.  On 22 June 2018, the Mother issued an application to vary upwards the maintenance payable to her and the children.  In her open proposal, the Mother asked for the monthly maintenance to be increased to HK$38,000 for herself, HK$35,000 for each of the children (i.e. a total of HK$70,000 for the children).

7.  Starting from 1 December 2018, the Father had unilaterally reduced the maintenance payable for the Mother and the children from HK$79,910 (as there was increase in the amounts in accordance with the percentage of the annual civil servant pay) to HK$40,000 without an order from the Court and without the Mother’s consent.  On 7 December 2018, the Mother applied to attach the Father’s salary with the payment of the maintenance.

II.     The decision below

8.  On 4 December 2020, Deputy District Court Judge Rita So dismissed all three applications. 

9.  She also held that there should be no orders as to costs for all the applications (‘the Decision’). 

1)     Father’s variation application

10.  The Father is a senior civil servant with a salary of about $200,000 per month including some allowances.  The Judge found that the Father’s monthly expenses are HK$100,732 (HK$40,700 for general expenses + HK$42,352 for personal expenses + HK$17,500 for children expenses).  His present wife used to work in the IT field and earned a salary of about $40,000 per month.  However, because of stress and dispute at work, she left her job in December 2018 and started a business of her own but so far no revenues have been generated.  

11.  The Mother is a university graduate and had worked until 1999, earning a monthly salary of $12,000.  After getting married and giving birth to the elder daughter, the Mother became a full-time housewife. The Mother obtained two masters degrees between 1999 and 2003.   From October 2014 to May 2018, the Mother had worked as a part‑time town planner for her friend earning on average HK$8,000 to HK$14,000 per month.  The Mother ceased working for her friend in June 2018 and has since been a full‑time housewife.

12.  The Judge found that the total monthly expenses of the Mother and the children are HK$90,220 (HK$36,380 for general expenses + HK$18,740 for personal expenses + HK$35,100 for children expenses).

13.  The Judge held that the Mother could resume working part‑time as she did between 2014 and 2018 and then gradually resume working full‑time.  She found that with her age and experience, she could earn on average $16,000 per month and then gradually earn more than that to at least $20,000 per month when she works full‑time. 

14.  The Judge rejected the Father’s allegation that the Mother earned much more from her dealings in buying and selling of stocks.  The Judge found that the Mother is not a professional earning a living from trading in shares for regular income.  She held that the Mother did make some profit from her investment in stocks and she could be expected to earn some dividends as stated by her in the Form E of $3,900 per month on average.  She held that income from the stocks was not a regular income that the Mother could rely upon.  The Judge also found that since the Father unilaterally reduced the amount of the monthly maintenance, the Mother had to resort to her savings to make up the difference.

15.  The Judge found that the Father had failed to make full and frank disclosure as to his financial circumstances.  The Judge relied on the following in coming to this view :

1)  The Father has failed to produce documents to prove the funding for the downpayment of the three properties in the Mainland, especially how much was contributed by his wife.

2)  The Father has failed to disclose documents for the purchase price of the two shops in the Mainland and the sale and purchase agreement.

3)  The Father has not disclosed in the Answer that at least his wife owns a Mercedes Benz, which was only admitted in cross‑examination.

4)  The Father has failed to disclose documents showing that the flats he bought in Thailand (according to the Father, only four out of five flats) had been forfeited.

5)  The Father has failed to produce documentary proof that a shop in Foshan is being placed in the market for rent.

16.  The Judge held that the 2014 Order was entered into by the parties under legal advice.  She rejected the Father’s contention that he was under pressure to enter into the 2014 Order and that the terms were unfair to him.  The Judge found that with the Father’s income and financial resources he is able to continue to pay for the maintenance for the Mother and the children in accordance with the terms of the 2014 Order. She was of the view that the amount the parties had agreed upon in 2014 Order which is pegged to the corresponding increase in the Father’s salary is reasonable.  The Judge held :

‘ 146. While the Father is emphasising that he is facing grave financial difficulties, including the repayment of various loans, it should be pointed out that these so‑called financial difficulties had mainly, if not entirely, been caused by the investments of these properties. While the father focuses on the financial difficulties, the value of those properties and the rental income should not be undermined and I am of the view that arrangements have to be made in realising cash to ease the financial constraints as alleged by the Father.’

2)     Mother’s variation application

17.  The Judge refused the Mother’s variation application.  She held :

‘ 163. Having considered the background and circumstances of the case, and evidence and submissions from the parties, I am of the view that the amounts ordered in the 2014 Order were appropriate and fair. The provision therein that the amounts shall be increased annually in accordance with the same percentage of the annual civil servant pay as announced by the HKSAR government has catered for the needs of reasonable increase in expenses. I rule that the same amounts, and the taking into account the corresponding increase in annual salary pay as stated in the 2014 Order, are reasonable, and I also rule that the Father has the ability to pay. There should not be an increase or decrease in maintenance for the Mother and for the Children.

164. The Mother may be of the view that the amounts are not sufficient, comparing to the amounts she asks for.  I have no doubt that the Mother loves the Children very much and would wish to give the best she could to the Children, as much as to the same level as before divorce during marriage, but at the same time, the Court has to do justice to both parties.

165. In view of the amounts of maintenance to the Mother and the Children, I am of the view that they are reasonable to maintain similar standard of living and to live reasonably comfortably.

166.   I am of the view that the amounts parties agreed on in the 2014 Order, in addition to the corresponding increase in the Father’s salary pay, is reasonable.  It is enough to provide for the Mother and the Children reasonably comfortably.  If there is any shortfall, they are for better provision of a more comfortable life, which the Mother should support herself and the Children with her own financial resources.’

3)     Mother’s income attachment application

18.  The Judge refused to order attachment of income.  She held, inter alia, that :

‘ 171. It is not in dispute that the Father had unilaterally reduced the amount of maintenance without the Mother’s consent. I notice that there is continuous payment, but in a much reduced sum. The Mother has been and is able to make up the shortfall with her own resources. Having considered the parties’ financial circumstances and having made the ruling as aforesaid, I accept that the Father had incurred his financial debts and liabilities, leading to his disposable income having decreased to an extent that made him unable to comply with the 2014 Order.

172.   However, with my ruling above, I have not accepted the Father’s application of decrease of maintenance and I am of the view that the Father has sufficient income and financial resources to pay for the amounts.  Re‑arrangement of the properties the Father owns, including selling the LG Property or some other properties, should be considered, if no further financial assistance is to be received from the Father’s family.  I can understand that before the trial hearing and before the Court having made the ruling, the Father has not been sure if the Court would accept his explanation and possibly order the amounts to be deceased to what he has been paying, with backdating effect.  I have considered the Father’s explanation.

....

173.   Further, the Father had confirmed with the Court that he undertakes to pay whatever amounts to be ordered by the Court as reasonable sums, and if in default in future, he will not oppose to any application for attachment of income order.  Given the background of the Father and the circumstances of the case, I have reasonable grounds to believe that the Father will make full and punctual payment in future and I am of the view that attachment of income is not to be ordered at this stage.’

19.  The Judge further held :

‘ 174. But I make it clear that I have ruled that the Father has the ability to pay for the amounts I order. After my ruling, the Father should be making arrangements, including considering selling or re‑arranging some of his properties, and he would be able to pay for the amounts ordered by the Court, including the outstanding amounts of maintenance. In the event that there is any payment of monthly maintenance in default in future, there should be no hesitation from the Court to order attachment of income, without having the need to go through trial.’

III.     The applications

20.  On 14 May 2021, the Father sought leave to appeal from the Judge against her refusal to reduce the amount of maintenance.  On 19 February 2021, the Mother also sought leave to appeal against the refusal to attach the Father’s income.  She also applied to the Judge to vary the costs order nisi.  She asked the Father to pay 50% of the costs.  Both parties’ applications below for leave to appeal were brought out of time.  On 29 October 2021, the Judge refused to grant leave to the Father and to the Mother in two separate judgments of the same date (‘the Leave Decisions’).  By a further judgment of the same date, she also refused to vary the costs order.

21.  (1)  The Father now renews his application for leave before this Court.  He is also seeking a stay of execution of the 2014 Order for payment of maintenance for the Mother and the children insofar as it is in excess of $35,000 per month and the school fees of the children from 1 December 2018 until the final adjudication of the appeal.   The Father also asked for a stay of all other applications for execution of the Decision (CAMP 512/2021).

       (2)  The Mother also renews her application for leave to appeal against the Judge’s refusal to attach the income of the Father (CAMP 515/2021). 

       (3)  The Mother further issued an application for leave to appeal against the Judge’s refusal to vary the costs order she had made below (CAMP 516/2021).   She had not sought leave from the Judge to appeal against her decision on costs.

22.  We will deal with applications on paper.

IV.     Principles

23.  Leave to appeal will only be granted if it can be shown that the appeal has a reasonable prospect of success or that the interest of justice requires the appeal to be heard.

24.  The refusal by the Judge not to vary a maintenance order is an exercise of discretion.  The task of the appeal court is not to exercise the discretion afresh but to review whether the discretion was properly exercised in the first place.  It would only interfere when it is shown that the exercise of the discretion was plainly wrong in the sense that, for example, the Judge had ignored relevant factors, considered irrelevant factors, applied wrong principles or the decision was beyond the generous ambit within which reasonable disagreement is possible.

V.     Our view

1)      CAMP 512/2021 Grounds of appeal of the Father

25.  The Father advanced the following grounds of appeal :

(i)  The Judge has failed to take into account the relevant matter that the Mother had unilaterally and without the Father’s knowledge or consent, withdrawn all his financial resources from their joint bank account, which had abused the Father’s trust of the Mother, and placed the Father in a seriously disadvantaged position before the 2014 Order, as well as in subsequent legal proceedings.

(ii)  The Judge has failed to take into account a relevant factor i.e. earning capacity and income from investments of the Mother, in his application for variation of maintenance, which is relevant under the Matrimonial Proceedings and Property Ordinance (Cap. 192) and the principles set out in LKW v DD (2012) 13 HKCFAR 537 and AEM v VFM [2008] HKFLR 106.

(iii)  The Judge erred in taking into account third parties resources without following the legal principles set out in KEWS v NCHC (Contribution by Third Parties) [2013] HKFLR.

(iv)  The Judge erred in setting a wrong criterion for the determination of maintenance variation and has misled herself in not following the principles and steps prescribed in LKW v DD.

(v)  The Judge had not taken into account the latest information disclosed by the Father regarding the earning capacity of his wife who is suffering from post natal depression and her need to care for a new born child, as well as updated situation of the assets outside Hong Kong which were no longer owned by the Father.  The Judge had wrongly continued to refer to these assets as the Father’s properties.  According to well established case law including LKW, the Judge must consider the assets and incomes at the time of the hearing as updated by the Father, and that her finding is plainly wrong.

(vi)  The Judge has failed to apply the ‘net effect’ test of the order, as well as the objective of independent living to be achieved under the case law.

(vii)  The Judge has failed to apply the correct legal standards in considering the conduct of parties regarding frank and full disclosure and was biased against the Father as in other instances set out above.

26.  The Father is repeating the same grounds of appeal that he had advanced before the Judge in his earlier application for leave to appeal.  The Judge had addressed each and every of the seven grounds of appeal in her Leave Decision.  We agree with her view that these grounds are not reasonably arguable.  The Judge had correctly applied the principles on variation of maintenance.  She had not committed any error in respect of her exercise of discretion and it would be a duplication of effort for us to deal further with these same grounds.  We will only comment on the Father’s contention that the nine properties that he bought were only acquired after his divorce from the Mother and therefore should not be taken into account by the Judge. In our view, the Judge had not wrongly treated the nine properties as the matrimonial assets and regarded them as being available for distribution between the parties as part of the matrimonial assets.   All that she had done was to say that the Father could have reduced his financial problems by disposing of these properties.

27.  As the Father failed in his application, there is no basis to stay the execution of the judgment below.

2)      CAMP 515/2021 Grounds of appeal of the Mother

28.  The Mother advanced the following grounds of appeal in respect of the Judge’s decision not to make an income attachment order. 

29.  1.)  The Judge had erred in the consideration of ‘reasonable excuse’ of default by the Father.  Under this ground, she further elaborated upon different sub‑headings, namely,

(i)  Default in payment while owning nine properties;

(ii)  Default in payment while his stable high income remains unchanged; and

(iii)  The Father’s self-explained excuse was wrongly accepted as a reasonable excuse by the Judge.

     2.)  The Judge erred in believing that the Father will make full and punctual payment.

     3.)  The Judge erred in not considering the risk of the Father dissipating his property.

     4.)  The Judge erred in dismissing the income attachment application based on the Father’s background.

     5.)  The Judge dismissed her application without considering the application of the relevant legislation.

30.  The Mother is basically repeating the same grounds that she had advanced below in seeking the income attachment order.  She emphasised the fact that the outstanding arrears after 36 months of default by the Father now amounted to $1.5 million.  She further emphasised that the nine properties owned by the Father (according to the Father’s own valuation) amounted to $21 million.  

31.  The refusal to grant the income attachment order is again an exercise of discretion.  The principle regarding an appeal against a discretion applies.  In our view, the Judge had adequately considered why attachment of income should not be made and she had addressed the grounds of appeal in her Leave Decision, with which we fully agree.  The Mother had already commenced fresh enforcement applications.  In our view, they should be the way forward instead of pursuing the appeal.  

3)     CAMP 516 of 2012 Costs order

32.  The Registrar of Civil Appeals has directed that since leave had not been sought from the Court below, this Court (the Court of Appeal) will not consider application (3).  In any event, we would have decided as follows. 

33.  The Judge held :

‘ 176. Generally, costs should follow the event. In the present case, I have dismissed the parties’ respective applications. I am of the view that there is no winning party of the proceedings. Having considered the parties’ respective open proposal, circumstances of the case, and the court’s ruling, I am of the view that it is fair to order no order as to costs for all the applications, including all costs reserved. This is a costs order nisi, which shall be made absolute within 14 days from this order.’

34.  The Judge’s decision on costs is again an exercise of discretion.  The same principle we have outlined above applies. We see no reason to differ from her view.

35.  Order 58, rule 2(5) and (6) of the Rules of the High Court (‘RHC’) provides :

‘ (5) So far as is practicable, every application for leave to appeal made to a judge or a master shall be made to the judge or the master against whose judgment, order or decision the appeal is sought.

(6)  In any case in which the Court of Appeal may so allow, any such application may be made direct to the Court of Appeal.’

36.  It has been held that an application made direct to the Court of Appeal without first applying to the court below will only be allowed in exceptional circumstances.  No exceptional circumstances have been advanced by the Mother why we should entertain this application.  The application would therefore, in any event, be disposed of on this ground alone.

VI.     Conclusion

37.  Accordingly, we will dismiss all three applications. 

38.  As the parties’ applications are totally without merit, pursuant to Order 59, rule 2A(8) of RHC, we will make an order that no party may request our determination to be reconsidered at an oral hearing inter partes.

39.  We will make an order nisi that there will be no order as to costs of these applications.