M v. L

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 2187 OF 2001

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J U D G M E N T

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1. This is the Respondent Husband’s application for variation downward of the maintenance payment by him for the only child of the family under a consent order dated 4^th May 2005 upon the dissolution of his marriage with the Petitioner Wife, on the basis that there have since been significant changes to the parties’ financial and other circumstances.  The Husband is a 59 years old engineer in the employ of the Civil Aviation Department of the Hong Kong Government but is due to retire in September 2008 when he reaches the age of 60, while the Wife is a 40 years old company manager, and the child, a daughter, is now a 14 years old secondary school boarding student in England.

2. The parties separated in about 2000 after being married for 11 years in 1989, and in March 2001 the Wife petitioned for divorce and also sought custody of the daughter and general ancillary relief.  The decree nisi of divorce was made on 3^rd July 2002 with custody of the daughter granted to the Wife unopposed, but for the next several years the parties were bitterly entrenched over the issues of the Wife’s desire to send the daughter who was then only 9 years old to study in a private boarding school in England and her consequential expenses, but which the Husband felt was too early for her and too expensive for them even with the assistance of an education allowance to which he was entitled under his employment.  His salary was then $77,500 per month, while hers was $25,000 per month, although it is common ground that she used to earn more than twice as much before with another company.  

3. Eventually the Husband relented to allow the daughter to leave for England, and after several days in court in May 2005, a settlement was reached on 4^th May 2005, which was then made an order of the court (the 2005 Order), in which the parties agreed not to make any financial claims against each other, and that all the terms of the settlement were in fact financial provisions for the daughter, including the following : -

(a)   that the Wife shall continue to be responsible for the premium payment to an education savings protection policy for the daughter with the Prudential Assurance Company Ltd;

(b)   that the Husband shall continue to be responsible for the payment of the daughter’s school/lodging fees and the provision of 3 air tickets per annum for her with his education allowance until his retirement;

(c)   that the Husband shall in addition pay a periodical payment of $15,500.00 per month for the benefit of the daughter by auto-pay into the Wife’s designated HSBC account until his retirement;

(d)   that upon his retirement the Husband shall pay a lump sum of $700,000 from his retirement pension into a trust fund account for the daughter’s future education;

(d)   that the sale proceeds of the parties’ former matrimonial home together with its deposit be paid for an insurance policy with the Prudential Assurance Company Ltd for the benefit of the daughter.

4. It is item (c) of the settlement, the periodical payment of $15,500 per month that the Husband now applies to vary downward. It should be noted that shortly after the making of the said order, he did protest that he never actually consented to the amount of the said maintenance, as there was some misunderstanding between him and his lawyers over the terms of the settlement, and only conceded when confronted with evidence to the contrary including the court transcripts of the proceedings. He then took the matter to the Court of Appeal to try to set aside the said consent order in December 2006 on the ground that the Wife had misled him and the court about her financial means over her purchase of a property jointly with her mother, and of her repayment of a loan to her mother with her severance payment and pension payment from her former employer which he said was not true, which appeal was however dismissed on 19^th December 2006 on the basis that there had been no such material non-disclosure on the part of the Wife.

5. So it was against this background that the Husband on 3^rd January 2007, just less than 3 weeks after the dismissal of his appeal,  launched his present application for an order that the periodical payment for the daughter be reduced by more than half to $7,500 per month, on the grounds that there have been significant increases to the daughter’s overseas school/lodging fees payable by him and to the exchange rate for the British pound sterling in which such fees are paid, that the daughter actually does not require so much maintenance for her living expenses, and that the Wife’s income has also improved so much that she should share the daughter’s expenses with him equally.

6. It is not surprising that the Wife looks at the Husband’s latest application with great trepidation and suspicion as part of his lengthy and persistent attempts to try to wriggle out of his financial obligations towards their daughter, and wants his application dismissed for waste of time and costs.

7. The power to vary a periodical payment order is expressly provided for by section 11 of The Matrimonial Proceedings and Property Ordinance, Cap.192 :

‘(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 the power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.’

How this power is to be exercised is stated in section 11(7) :

‘(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.’

8. The approach of the court, as required by section 11(7), is therefore to consider all the circumstances of the case, but it does not mean that the court is required to proceed from the starting point of the original order, and instead to look at the matter afresh : Flavellv Flavell [1991] 1 FCR 353 at 357B, following Lewis v Lewis [1977] 1 WLR 409 and Garner v Garner [1992] 1 FLR 573. 

9. As any change in any of the matters to which the court was required to consider when making the original order is one of the circumstances to be considered, almost invariably an application to vary an earlier periodical payment order will be brought on the basis that there has been changes in the circumstances since the original order, for example, the increased costs in supporting a growing child, or that one party may be more adversely affected by the increase in the costs of living : Garner v Garner.

10. An increase in the wealth or income of the wife can also be taken into account, in the same way as a decrease in the income of the husband, in considering an application for a downward adjustment of the maintenance payable : Primavera v Primavera [1991] 1 FLR 16 and Cornick v Cornick (No.2) [1995] 2 FLR 490. 

11. 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.

12.  There is no dispute that the Husband’s income has since the 2005 Order been reduced, at one point down to $69,615 per month in 2006, and even with a subsequent 5% raise in 2007 which brought it back up to about $73,100 per month, it would still mean a drop by some $4,500 than when the said order was made.

13. Furthermore, the Husband claims that there have been very significant increases to the daughter’s school and lodging fees, which together with the rise in the exchange rate for British Pound Stirling,  would amount to 3 times more than they were in 2005, and that even with the assistance of the education allowance, he still runs into severe deficits  according to the following figures extracted from his closing submission :

14. While the exchange rate in 2007 would appear more like the lower figure of about 15.5 on average instead of the Husband’s figure of 16, nevertheless when one includes his monthly maintenance payment of $15,500 as well as the insurance premium payment of $2,088 for the daughter, the Husband’s total monthly provision for the daughter would run up to $20,661 in 2005/06, $25,166 in 2006/07, and $27,163 for the current year, an increase of more than $6,500 per month from 2005, which when taken into account of his reduced income, would give a total sum of $11,000 per month since the 2005 Order, an amount which can be said to be quite significant indeed.

15. In his Financial Statement (Form E) file in January 2007 in support of his application, the Husband put his then total monthly expenditure at $94,548, and thus a deficit of more than $10,000 per month. The Wife did not mount any serious challenge against his alleged expenditure at the hearing save for his tax provisions which I agree that he might have double-accounted with his tax loan repayment, and with proper adjustment it should then bring his expenditure to just within his means, with only about $5,000 for his personal expenses which is about half of the daughter’s, and much less than the Wife’s, as will be seen from her Form E, and that was just the situation in early 2007.

16. As seen from the above, the Husband’s payment for the daughter’s school/lodging fees for the year 2007/08 has increased by some $2,300 per month from the previous year, and with the additional increases to his various other expenses set out under Item 4.4 : Anticipated Future Expenses in his Form E, of which again the Wife did not have any serious dispute, the Husband would have come under some serious deficit again had there not been a 5% raise to his salary later in the same year, which should even things out, albeit just barely.

17. The Wife however argues that the annual increase to the daughter’s school/lodging fees were in fact anticipated by the parties when they were budgeting the daughter’s expenses at the time of the 2005 Order, and that it was part of the overall settlement package reached between the parties, she alleges, when she agreed to give up her rights for maintenance herself or for her share of the sale proceeds of the family assets, of which she accuses the Husband of having already gambled away $1 million.

18. The Husband of course denies the allegation of gambling away family assets, which I understand even if true occurred some years ago and may not serve any useful purpose to warrant an investigation here, there is however no question in my mind that the entire package of the 2005 Order was all about the future financial provisions for the daughter, including anticipation of the Husband’s retirement which was then only a few years away. 

19. It is of course one thing to have anticipated some annual  increment to various expenses, and also of  inflation, it is another matter whether one is able to meet such anticipated increases  without any difficulty when they actually arrive, which is a question of fact. It is also a fact that the Husband has all along insisted that the Wife has deliberately inflated the daughter’s expenses and that she never spends as much as $15,500 per month on the daughter especially when her school/lodging expenses have already been taken care of by him.

20. While it is accepted that the said monthly maintenance is to meet the daughter’s personal expenses both in England and Hong Kong, the details of which have been set out in the Wife’s Form E at slightly under $15,000 per month, of which about $10,000 are on clothing, meals, holidays, entertainment and some other non-essential items, the Husband insists that they are on the high side for a 14 year old, and it was upon his extensive cross-examination that the Wife finally conceded at the hearing that she has in fact been making some savings from the said monthly maintenance, which together with savings from her own income as well as red pocket money for the daughter during Chinese New Year, in the total sum of about $140,000 over the past 2 years, which would amount to about $5,000 per month on average, of which she claims about half would come from the Husband’s maintenance, which if true would mean that the daughter’s actual monthly spending should only be about $13,000 per month on average instead of $15,500 as alleged by the Wife at the time of the 2005 Order.

21. The Wife’s explanation for this discrepancy is that as she could not expect any more monthly maintenance for the daughter from the Husband upon his retirement later this year, the burden of putting the daughter through school up to finishing university would then all fall on her shoulders, she therefore decided to cut down on the daughter’s expenses in order to save up as much as possible for her future education funds.

22. While I can understand the Wife’s concern for her daughter’s future in view of the Husband’s imminent retirement, I do not think that it was something which she only realised recently, but instead must have been at the forefront of her mind, and I am sure of the Husband’s as well, at the time when the 2005 Order was agreed, as clearly the terms were all provisions for the daughter, most of which by the Husband including  from his retirement pension, thus there may be a point to his suspicion that the Wife might have deliberately exaggerated the daughter’s needs so as to include a hidden element of savings when they were negotiating over the monthly maintenance for her in 2005.

23. There is of course nothing wrong in appropriate cases to include savings as part of a child’s reasonable needs or expenses, provided that it is clearly set out in the claim and properly disclosed to the other side and the court. Here there is no question that the Wife had never disclosed it either in her affidavits or her testimony in court when the 2005 Order was made, nor to the Husband during their negotiation as he has insisted. It may well be a case that the Wife had only decided to do so later on after the order was made without informing the Husband. Either way it is clear that it was not something that the Husband would have agreed at the time of the 2005 Order, in view of the fact that he had always been reluctant to accept that the daughter required as much as $15,500 per month on top of the other provisions which he had already made for her under the order.

24. Furthermore, it is also not in dispute that the Wife’s own income has since the 2005 Order been improved quite significantly from $25,000 to $43,507 in basic salary plus travelling and other allowances of some $12,700, bringing her total income to some $58,800 per month as a result of changing to a new job. However, according to her evidence, that change actually took place 3 years ago, which would put it around late 2004, well before the said order was made, thus raising the point that she should have informed the court and the Husband of the same, which she was under a duty to do so, as surely it would be a significant factor in his decision over the amount of his monthly maintenance for the daughter.

25. While I accept that even with such a substantial increase to her income, it does not necessarily follow that the Husband’s maintenance for the daughter should therefore automatically be adjusted accordingly, as it would be relevant to also consider the Wife’s own needs and expenses to ascertain if she can afford to contribute towards the daughter’s maintenance and thereby reduce the Husband’s burden. 

26. In her Form E filed in April 2007 the Wife put the total monthly expenses for herself at about $54,000, of which as aforesaid more than $13,000 are for her personal spending, and $14,823 for the daughter, making a total of almost $69,000 per month. Given her earlier concession that in fact her daughter does not spend as much, and which have all along been met by the Husband’s current monthly maintenance, it is clear that even on her estimation, the Wife has more than $4,000 per month to spare after meeting her own expenses.  

27. The Wife has argued that she needs to save up as much as possible for the daughter’s future expenses in particularly her education funds which she estimates at more than $3.5 millions to put her through university, and that even with the Husband’s future provisions under the 2005 Order, it would still mean that she will have to shoulder up the balance all by herself.

28. Her argument is in fact based on the fact that upon the Husband’s retirement, as there will be no more education allowance to subsidize the daughter’s education in England, it would be her plan to send the daughter to Australia, where she was born and is a resident, to continue with her secondary education in a private school and eventually university there, which she admits will be somewhat less expensive than in England but still a heavy burden on her, in particularly if the daughter were to attend private school.

29. While the plan for the daughter to study in Australia later this year is acceptable to the Husband as inevitable, he disputes both the necessity of her attending the more expensive private school and the Wife’s claim that she will be charged as a foreign student in school fees rather than the much lower fees for local students in view of her residency status, and hence she will not require as much as $3.5 million as alleged. Unfortunately these information before the court were far from clear or certain at the hearing, and since the move will not happen until later this year, I therefore do not propose at this stage to take the daughter’s possible needs and expenses in Australia into account at this stage in considering this application.

30. In conclusion, for all the reasons aforesaid I am satisfied that  there have been significant changes to both of the parties’ financial and other circumstances to justify a proper  adjustment to the Husband’s current monthly maintenance for the daughter, and that a reduction of $4,500 would be a fair sum which should ease up his tight monthly budget and at the same time would not impact on the current needs and spending of either the daughter or the Wife in the circumstances. The periodical payment payable by the Husband for the daughter should therefore be reduced to $11,000 per month, and to be dated back to the time of his application, i.e. as from 1^st February 2007, but the overpayment is to be set off against the lump sum of $700,000 payable upon his retirement under the 2005 Order instead of against the daughter’s future monthly maintenance to avoid any possible hardship or difficulty to the Wife.

31. Lastly, as both parties are unrepresented, I make no order as to costs, which is an order nisi to be made absolute at the expiration of 14 days.