CLY v. WKB

FCMC 9727/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 9727 OF 2002

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J U D G M E N T

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1.  On 26^th February 2008 the Petitioner Wife issued a judgment summons against the Respondent Husband over maintenance for their 2 children at the rate of HK$5,500 per month under a consent order made on 23^rd July 2003 upon their divorce but which he has fallen into arrears since January 2007. At the 1^st hearing on 30^th May 2008 the Husband claimed financial difficulties and agreed to file his Financial Statement (Form E) to disclose his present financial situation.

2.  At the returned hearing on 9^th July 2008 the Husband applied for variation of the said maintenance down to HK$2,500 per month for the children. Upon his undertaking to make that payment on interim basis and without prejudice to their respective claims at the trial proper, the parties agreed that the judgment summons be adjourned pending the determination of his variation application, which is the 1^st matter now before me.  

3.  His application for variation is of course being opposed by the Wife who insists that she needs at least the original amount, if not more, given that the children are now older and their expenses have increased since the said order, and that the Husband has other financial resources from his previous property investments which he has not properly disclosed but which should enable him to continue with the children’s maintenance under that order without any difficulty.

4.  The 2nd matter is the Wife’s subsequent application for an order that the former matrimonial home at Kingswood Villas, in which she and the children have been residing and is held in the joint names of the parties, be sold as soon as possible, that the net sale proceeds be shared equally between the parties but part of the Husband’s share be held in trust for the children’s future education expenses, and that after the sale he shall increase his current maintenance for the children to take into account of their share of the rental expenses.

5.  This application was in fact only made in the middle of the trial of the Husband’s said application, and was in fact immediately followed by another application, also by the Wife, issued on 23^rd February 2009 for a charging order against his interest in the former matrimonial home for the arrears of children’s maintenance, which was no doubt made in anticipation that his variation application may fail, while her application for sale of the property will be successful.

6.  While the Husband is not agreeable to the sale of the former matrimonial home at this stage, he did not object to that application being heard together with his to save time and costs, although it was inevitable that additional evidence had to be adduced with further arguments from the parties, which accounts for the hearing being dragged on much longer than one would have preferred.

7.  The Wife is a civil servant while the Husband is a building management manager, and there is no serious dispute as to their monthly salary/income at HK$29,360 and HK$15,800 respectively, but the main issue is as noted above over the extent of the Husband’s financial resources, of which the Wife believes that he has made profits in excess of HK$3 millions over the years from various property transactions and hence he should not be in any financial difficulties.

8.  The Husband in the main does not dispute his involvement in those transactions but insists that they were investments of his mother and his family, and that at most he had only a 1/9 share in some of them which is negligible, hence he had had to rely on loans from his family for his living expenses all these years, as almost all of his monthly salary had been used to meet the children’s maintenance and his share of the mortgage payments of the former matrimonial home in which the Wife and the children have been residing since the divorce, and now that the mortgage has been discharged, he requires his income to meet his own living expenses as well as to repay his family, hence he can no longer afford to keep up with the current maintenance of the children, some of whose expenses he also disputes as either unreasonable, unnecessary or excessive, in particularly those relating to the daughter who is studying in a boarding school in UK. Given that those property dealings had span over many years even before the marriage, it would be relevant to go into the parties’ financial background in more details.      

Background

9.  The Husband was born in 1958 into a working class family of 8 children, ranking 2^nd amongst them. His father ran a small convenience store to support the family but passed away in 1971 when the Husband and many of his siblings were still at school, leaving behind little of value save for the convenience store, hence his mother had to work long hours to support the family. In about 1986 a property at Kornhill (“Kornhill Property”) was purchased in the joint names of the Husband and his elder brother WKH for HK$385,050 as a home for the family.

10.  2 years later in 1988 a 2^nd property was purchased at Marina Cove (“Marina Cove Property”) in the joint names of the Husband and 2 brothers the said WKH and WKF for HK$1,945,000 by means of a mortgage for HK$1,600,000 from the Chase Manhattan Bank. It was then let out for rental income to meet the monthly mortgage payments.

11.  The parties were already courting at around the time when these properties were purchased. They subsequently married on 14^th February 1990 and as aforesaid have 2 children from the marriage, a daughter who will be 16 by December this year, and a son now 13. After the marriage both parties continued to work to support the family, with the Wife subsequently joining the civil service while the Husband continued to work in building management.

12.  In 1992 the parties purchased a property for their home at Flat X, XX/F, Block X, Locwood Court, Kingswood Villas, Tin Shui Wai, New Territories (“the former Matrimonial Home”) in their joint names with the Husband’s said elder brother WKH for $1,248,000, of which the down payment was paid by the Husband allegedly with the assistance of HK$180,000 from his mother, with the balance secured by a mortgage for $1,060,000.

13.  In 1993 another property at Rhine Garden, Tsuen Wan (“Rhine Garden Property”) was purchased in the Husband’s sole name for HK$2,187,000 with the assistance of a mortgage from Bank of East Asia. It was first let out for rental income to meet the mortgage payments, and was then sold 4 years later in 1997 for HK$4,180,000 with a profit of about HK$1.9 millions.    

14.  Towards the year of 2000 the marital relationship between the parties started to deteriorate to the extent that in August 2001 the Husband moved out of the matrimonial home to reside in a property at Island Resort, Siu Sai Wan, Hong Kong (“Island Resort Property”) purchased about a month earlier in July under the sole name of the Husband’s said elder brother WKH for HK$3,179,000 with the assistance of a mortgage from the Bank of East Asia. It is again the Husband’s case that it is his mother’s property and her present home after she had sold the Kornhill Property, and it is where he has since been residing.

15.  In February 2002 the Marina Cove Property was sold for HK$5,050,000, followed shortly thereafter by the sale of the Kornhill Property in August 2003 for HK$1,850,000.   

16.  On 23^rd August 2002 the Wife filed for divorce on the basis of his unreasonable behaviour. Eventually the parties were able to reach overall divorce settlement after attending mediation essentially on the following terms :

(a)  custody of both children was to be granted to the Wife with certain define access to the Husband;

(b) the Husband was to pay the Wife for herself nominal maintenance of $1.00 per annum;

(c)  the Husband was to pay the Wife for the children $5,500.00 per month for their maintenance in equal share until the age of 18 or completion of full-time education whichever is later;

(d) the Wife and the children were to reside in the former matrimonial home which shall remain in the joint names of the parties and that the monthly mortgage payments were to be paid by the parties in equal share.  

17.  These terms were accordingly made an order of the court on 23^rd July 2003 (“the said order”)(B : 164 – 166), followed by the decree nisi of divorce being made absolute on 9^th August 2003.

18.  It is common ground that in fact at the time of the said order, the Husband was already paying the entire mortgage instalment of the matrimonial home in the sum of $11,868 per month, it was therefore agreed between the parties that instead of the Husband paying the Wife HK$5,500 per month for the children’s maintenance and for her to pay him back more or less the same amount for her share of the monthly mortgage instalment, that he should instead continue to be solely responsible for the entire mortgage instalment payments while the Wife was to be solely responsible for the children’s maintenance.

19.  It is also common ground that this was supposed to be just a short term arrangement between the parties as it was their intention to sell the matrimonial home and to split the net sale proceed, but as it turned out that the property market would soon be substantially impacted by the emergence of the Sars disease, and hence the parties subsequently agreed to postpone the sale until such time when the market picked up again to a level acceptable to them.

20.  Meanwhile the Wife and the children moved to a rented flat at Yau Tong to be closer to their schools, while the former matrimonial home was let out for rental income to subsidize the Wife’s rental expenses. Towards the end of 2007, after the daughter had gone overseas to study in UK, the Wife and the son then moved back to the former matrimonial home, where they have remained up to the present.

21.  The mortgage was eventually paid off by the end of 2006, the Wife therefore requested through her solicitors for the Husband to start paying the children’s maintenance under the said order in January 2007, and when she received no reply or payment from him, she issued a judgment summons against him on 26^th February 2008 for arrears of the maintenance which had by then accrued for over a year to $71,500.

22.  On 24^th May 2008 and perhaps in response to the Wife’s action, the Husband made the variation application now before me. In his supportive affirmation prepared by him in person, as he has been throughout the entire proceedings, the Husband claimed that as he was only earning slightly more than $11,000 per month at the time of the said order, all of which had been used to meet the monthly mortgage payments, he had had to borrow at least HK$3,000 per month from his family to meet his own expenses over all these years, hence even though the mortgage had finally been paid off towards the end of 2006, he was by then in debt to his family of about $760,000, for which he would have to make repayments from his income, hence he could not afford to resume the maintenance payment for the children at the original rate under the said order, but at a reduced rate of $2,500 instead after taking into account of his own needs and expenses.

23.  The Wife does not dispute the amount of the Husband’s income from his job in building management at the time when he was paying for the mortgage of the matrimonial home, but as noted above she believes that he has other resources through the dealings of those properties either by himself or with his brothers, from rental income by letting out some of them, and from the huge profits from their sale that it would not have been necessary for him to borrow from his family to meet his living expenses, hence his alleged borrowings from his family and the resultant huge debts were all fabricated by him to paint a false picture of financial difficulties and to mislead the court as to his true financial situation.

24.  The extent of the Husband’s involvement in these properties thus form the central issue between the parties in his application, but before considering the evidence over his dealing of these properties, it would be helpful, especially to the Husband who was unrepresented throughout the proceedings, to first set out the applicable principles in dealing with his application.     

The Principles

25.  The powers of the court to vary or discharge a maintenance order are derived from Section 11 of Matrimonial Proceedings and Property Ordinance, Cap.192 (MPPO), and subsection (7) provides for the manner in which the court is to exercise such powers as follows :

“ 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…..”

26.  The section however does not explain how the court should approach the application, and it would be helpful to refer to Jackson’s Matrimonial Finance and Taxation, 7^th Edition, Chap. 3. 131 which summarised both the old and modern approach as follows :                                    

“The old approach to variation no longer applies, where it was said that the jurisdiction “is a jurisdiction to vary, and basically what the court has to do is to consider whether an order to vary should be made, and, if so, by how much the order should be varied. Prima facie, it is not a jurisdiction to re-fix de novo the amount of maintenance.”. The court proceeded, subject to fraud or the like, on the basis that the original order was properly made at the time when it was made, and it proceeded to consider to what extent the means of the parties had altered since the original order was made. It was not possible, therefore, to seek to vary an order on the basis that it was too little or too much when made : that was a matter for appeal against the original order, a very different manner from variation.

               The modern approach is that the court has to consider all the circumstances of the case, and the court is not hide-bound by the existence of a previous order : the court must look at the matter de novo and make an order that is reasonable in the current circumstances. The usual basis on which a variation of an order for periodical payments is founded is that there has been a material change in the circumstances of one or both the parties. On application for revision, the court, as it was put in one case, has “regard to all the circumstances of the case in the same manner as if those circumstances had existed at the date of the original order”. The court may increase a wife’s order for periodical payments beyond her strict budgeting requirements if the husband’s circumstances justify it. Financial mismanagement may be one of the relevant circumstances to which the court is required to have regard under section 31(7). The basis and intended effect of the original order are relevant factors to which the court on a variation application should have regard”. The change in circumstances may not be personal : it may be something affecting the community as a whole, such as a change in tax provisions, or an increase in the cost of living”.

27.  This modern approach was adopted by the English Court of Appeal in Lewis v Lewis [1977] 1 WLR 409 when the old approach was ultimately rejected and Ormrod LJ said this :                                

“I am bound to say that it has always seemed to me, with respect, that the powers of variation, which were given by statute to this court in a series of enactments going right back to 1857, have been, if anything, progressively enlarged, and that the intention of Parliament is that, in handling these family matters where money is concerned, the court should have as unfettered a discretion as possible to deal with the situation as it is when the matter comes before it. I am sure it is not the intention of Parliament in any way to trammel the discretion by any kind of technical reasoning or technical grounds”.

28.  This modern approach was followed by Garner v Garner [1992] 1 FLR 573, CA which held there was a need to give such weight to the original order as might be appropriate, but there were also wide judicial powers to step outside any actual changes which might have occurred since the making of the original order and to look at the totality of all the circumstances afresh without being confined solely or essentially to matters of change. Cazalet J explained :

“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 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 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 1873. 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 old order as may be thought appropriate’.

29.  It is therefore clear from the above cases that while the court is required to have regard to any change in any of the matters to which the court was required to consider when making the original order, the basis and intended effect of that original order are also relevant factors or circumstances to which the court on variation should pay regard and that there should not be a radical departure from the approach taken by the parties themselves when they entered into an agreement embodied in a consent order : Boylan v Boylan [1988] FLR 282.

30.  This approach has since been followed in our jurisdiction and approved by the Court of Appeal in AEM v VFM [2008] HKFLR 1, 147. It is with these principles as my guidance that I approach the Husband’s application by first considering his financial situation.

Husband’s Financial Situation

31.  As noted above there is no dispute as to the Husband’s current basic salary of HK$14,800 plus average bonus of around HK$1,000, giving him a gross income from his job as a building management supervisor of HK$15,800 per month. The real issue is over his ability to continue with the children’s maintenance under the original order, which goes into the extent of his own needs and expenses, and whether he has other financial resources as suspected by the Wife.

32.  In his Form E filed on 4^th July 2008 in support of his variation application, the Husband set out his monthly expenditure at HK$18,500 inclusive of the current children’s maintenance of HK$5,500, which would then put his own expenses at HK$13,000, with only HK$2,500 to spare for the children’s maintenance, let alone to repay his alleged huge debt to his family, hence his proposal to reduce the children’s maintenance from HK$5,500 to this amount instead (B : 314c).

33.  Amongst his stated personal expenses, 2 items stand out as the more controversial : HK$4,000 to his mother and HK$3,110 being repayment of a bank loan. For the former, his evidence is that it is basically his share of the household expenses including accommodation, utilities and meals at home at the Island Resort Property. The Wife however contends that if he has an interest in this property, then he should not have to pay for his own accommodation.

34.  As for the latter, it is for the monthly repayment of a loan of HK$100,000 from Standard Chartered Bank which he obtained in 2008 (B : 143 - 148) to fund his school fees for a Bachelor of Business (Management) programme at RMIT University in association with The Hong Kong Management Association, which he has been undertaking in the evening since early 2008, and which he claims required for his current position by his employer (B : 153 – 160). The Wife however questions whether this study is necessary given that the Husband is already well experienced having worked in this field for almost 30 years.

35.  Having heard the Husband’s explanation, I do not find either item of expenses suspicious or inappropriate. Regardless whether he has any interest in the Island Resort Property, it seems normal for him to contribute towards his share of the household utilities and food expenses while living there, and if he indeed has an interest in the property as suspected by the Wife, to also contribute towards the monthly mortgage instalments. As for his study programme, I do not see anything suspicious about it either, in particularly when it is related to his job and required by his employer.

36.  With no serious challenge to his other expenses, and at his stated income, it seems that he does have a good case for his application, if he indeed has no other resources, which takes me to the real issue in this case, as the Wife believes that he has made huge profits over the years from the various property transactions referred to above, of which I shall now consider the evidence on each in details.

Kornhill Property

37.  The Husband’s case in respect of this property is first set out in his affirmation of 24^th May 2008 (B : 302) in which he described how he came from a poor working class family of 8 children, and when his father died prematurely in 1971 when the Husband was just 13, leaving behind only a small convenience store to his mother who then had to work long hours to raise him and his siblings, and that when his mother purchased her 1^st property at Kornhill in 1986, she paid for the entire purchase price of HK$385,000 from his father’s estate, her own savings and a loan from her sister, but as she could not read or write, she decided to put the title in the joint name of her 2 eldest children : the said WKH and the Husband. He insisted that he had no beneficial interest in that property as he was then earning barely enough to support himself and could not have made any financial contribution towards its purchase to become a beneficial owner.

38.  However, in his evidence in chief at the trial, the Husband appeared to have changed his evidence on the payment for the purchase of the Kornhill Property in that it was in fact contributed by all the 8 siblings including himself together with his mother’s savings, as all of them were already working and were going to make it their home, they therefore all had an equal interest in that property with their mother and hence he had a 1/9 share.

39.  After the property was sold in 2003 for HK$1,850,000, according to the Husband, part of the proceeds were used to pay off a personal bank loan, HK$700,000 were lent to one of his younger brothers for purchasing his own property, and the remaining HK$700,000 were then used for the family’s daily expenses.

40.  The Wife however believes that the property belonged to the Husband jointly with his elder brother, or at most to the 4 brothers only rather than to the entire family, hence the Husband’s share should at least be ¼ and at best ½ in the sale proceeds, of which she also does not accept the alleged loan of HK$700,000 to one of the younger brothers, or else it should be considered as money owed and due to the Husband.

41.  When the property was first purchased in 1986, the Husband was then already 28 and no doubt, like his elder brother, would have been working for a number of years by then, and while it is not clear as to what was his elder brother’s job or how much he was then earning, there is no dispute that the Husband was then merely working as a clerk in building management with limited income, it is in my view highly unlikely that he would have been able come up with almost HK$200,000 for his half share of the purchase price and costs.

42.  In the premises, and given the fact that all the siblings were also already working at that time and that it was intended to be a home for all of them, it seems that there is some strength in the Husband’s argument that it was necessary for the entire family to chip in the purchase of the property. However, by the time of its sale some 17 years later, as will be apparent below, the dealings of the sale proceeds of that property were no longer as straightforward, but meanwhile I shall proceed to consider the purchase of the next property.

Marina Cove Property

43.  This property was purchased about 2 years after the Kornhill Property in September 1998 for HK$1,945,000 in the joint names of the Husband with 2 of his brothers including the said WKH. The Husband’s evidence at the trial was that it was an investment of his family with the down payment of HK$600,000, the renovation expenses as well as the mortgage payments all contributed by him, his mother and all his siblings as in the case with the Kornhill Property.

44.  As for its sale in February 2002 for HK$5,050,000, the Husband’s evidence is that from the net proceeds of HK$4,350,000, HK$1,850,000 were used to meet the down payment for the Island Resort Property, with the balance of HK$HK$2,500,000 paid to his mother and elder brother WKH to meet the family expenses but some money had been lost in the stock market.

45.  Mr Lau, counsel for the Wife, however argues that the Husband’s account of the sale proceeds is contradictory or inconsistent to his argument that he has only 1/9 share in what he claims to be family investments in that, firstly, there is no evidence over the distribution of the sale proceeds to his other siblings; secondly, there is no explanation as to why his mother and elder brother appeared to have received the bulk of the proceeds if they, like him, only had 1/9 of the share each; and thirdly, that it is both unclear and unsatisfactory for him to say that the balance were spent on family expenses without any details as to what exactly were these expenses and who amongst the siblings would have benefitted from such spending, given that many of the siblings would have their own family and living elsewhere by then.

46.  Mr Lau therefore argues that these 2 properties were in all likelihood the joint investments of the Husband with his brothers rather than of the entire family, which explains why the sale proceeds appeared to have been distributed only amongst the brothers, such as the alleged loan of HK$700,000 to the younger brother, and the even bigger sum of HK$2,500,000 to elder brother WKH, while he has conveniently omitted to mention anything about the distribution to himself, or has tried to hide it behind some alleged loan of HK$760,000 from his family.

47.  According to the Husband, this HK$760,000 were money lent to him by his family dating back to 1992 after he had bought the matrimonial home with the Wife and had to start borrowing HK$3,000 each month to help out with his share of the mortgage payments, and then in 2002 after his divorce when he had to shoulder up the entire mortgage payments and therefore had to borrow more money from his family at HK$7,000 per month to meet his own personal expenses up to the end of 2006, hence his calculation of HK$3,000 x 128 month + HK$7,000 x 54 months = HK$760,000 (B : 108). He has also produced copies of some pay-in-slips as evidence of such borrowings over the years mainly from his elder brother into his bank accounts (B : 122 – 141).

48.  At the hearing he was able to be more specific in that it was his mother and elder brother WKH who lent him the money every month. However, his evidence started to become muddled under cross-examination when he first said that his family had made many requests for repayment over the years, including suggesting that he should use his alleged 1/9 share of the sale proceeds of various properties for set off the debt, but that there was no agreement with his family as he could not make up his mind about it, and that it was possible that his share of the sale proceeds of the Marina Cove Property of HK$500,000 may have been used to set off part of his debt, which he said perhaps explains why his family has not been pressing him for repayment lately.

49.  I find this evidence of the Husband vague, inconsistent and contradictory to his earlier account of the sale proceeds, and that it appears to me inconceivable that he could not be sure how such a large sum of money had actually been used. In any event, if indeed the HK$500,000 had been used to set off his debt due to his family, then he should not have claimed in his affirmations that he still owed them HK$760,000, and if not, then what has happened to this money as it is clearly absent from any of the Husband’s disclosed bank accounts?

50.  While I accept that when the former matrimonial home was purchased in 1992 with a heavy mortgage, the Husband could not have been able to manage it with his own income, but the Wife was then also earning an income, while there is no evidence to suggest that his mother or his elder brother could afford to lend him HK$3,000 every month and for more than 10 years. In fact, it is not even known whether his mother was then still gainfully employed.

51.  Furthermore, the documents produced by the Husband and exhibited to his Form E, specifically the correspondence between his elder brother WKH and the Inland Revenue Department in late 1989 and early 1990 (B : 111 – 116) over his salaries tax in which references were made to the purchases of the said Kornhill and Marina Cove properties also seem to contradict the Husband’s own evidence.

52.  In his letter dated 28^th November 1989 in answering the Inland Revenue Department’s quiries over the source of funds for the purchase of the 2 properties, WKH claimed that the HK$385,050 for the Kornhill Property were paid by 10 instalments from family savings, while the down payment of HK$345,000 for the Marina Cove Property were also paid from family savings (B : 112).

53.  He then went on to explain in a subsequent letter dated 10^th January 1990 (B : 115 – 116) that the family savings were accumulated for a very long period of time, mainly from the income of the family members, fixed deposits and investments in the stock market, and that each member, including the Husband, had contributed to this family savings on average HK$15,000 each year for 10 years.

54.  These however seem to contradict the Husband’s own evidence that not only did he have no money to make any contribution towards the purchases of these 2 properties, but that he had had to resort to borrowing from his family every month for years to meet his living expenses. While I accept that these letters were written some 20 years ago under different circumstances, and that his brother might well have had his own agenda for making those statements, they were evidently relied on by the Husband in these proceedings but only served to cause confusion to his case rather than clarifying.

55.  His subsequent purchase of the Rhine Garden Property at a time when he claims to have to resort to borrowing regularly from his family to meet his own mortgage payments also appears to cause further confusion to his case and fuel the Wife’s suspicion of undisclosed financial resources on his part.

Rhine Garden Property

56.  This property was as noted above purchased in the Husband’s sole name in May 1993 for HK$2,187,000 by means of a mortgage. It is his case that it was his elder brother WKH’s own investment which had nothing to do with him as he simply could not afford to be involved given that he was already burdened by the mortgage of the former matrimonial home at that time. This property was sold 4 years later in October 1997 for HK$4,180,000 at a gain of almost HK$2 millions.

57.  While it may well be true for the Husband to say that he could not afford this property all by himself given the substantial down payment involved, his evidence that his elder brother was then earning only HK$10,000 per month does not mean that his brother could afford it either, nor was there any explanation from him as to why he was named the registered owner if his brother was indeed the purchaser, of which the burden of proof was clearly on the Husband. 

58.  I am therefore not persuaded that the Husband had absolutely nothing to do with this property other than to just lend his name to the purchase, although with the limited evidence before me, it is not possible for me to decide whether it was an investment of just the Husband with his elder brother, as suspected by the Wife, or that other members of the family were also involved in the same way as what the Husband has said about the earlier properties, although the statements of some of the elder brother’s bank accounts produced by the Husband (B : 451 – 487) did show many significant deposits other than what appeared to be his own income, which could well be contributions from other siblings in relation to this property. The Husband’s evidence in respect of this property is again vague, inadequate and simply unsatisfactory, and the same can be said about his present residence : the Island Resort Property.

Island Resort Property

59.  This property was bought in the sole name of elder brother WKH on 16^th July 2001 for HK$3,719,000 with the assistance of a mortgage from Bank of East Asia (B : 401 – 19), which would require about HK$1.1 million upfront in cash for the down payment, but according to the Husband it was in fact more at about HK$1.3 million in total after adding in the legal costs, stamp duty and renovation of the property.

60.  The Husband’s evidence on who made this payment, how it was paid, and who is the beneficial owner of this property is again vague and unclear, other than that it has since been occupied by his mother, his said elder brother, one of his younger brothers, and himself, and that he has been paying HK$4,000 per month for his share of the household expenses, but denies to have any interest in the property, as he explained under cross-examination that since he still owed his family debts, he was not allowed to have any interest in this property.

61.  Given my reservation over his evidence about his alleged debts to his family referred to above, I have great difficulty accepting this explanation of his. Furthermore, the timing of the purchase of this property shortly after the breakdown of his marriage when he moved out of the former matrimonial home to find his own accommodation is too much of an coincidence if he indeed had nothing to do with this property.

62.  In conclusion, I do not accept the Husband’s evidence that he has only a 1/9 share in only the Kornhill Property and the Marina Cove Property. I believe in fact he had invested in all 4 of the said properties together with his mother, his elder brother and some of his younger brothers, although as noted above, I cannot be certain how many of his siblings were actually involved, as it seems that some of his younger siblings such as his sisters did not appear to have received any benefits or shares of the sale proceeds.

63.  For these reasons, while I am unable to state for certain the Husband’s actual share in these properties, and hence its amount, I do not accept that it would be only 1/9 as alleged by him, but whatever share it may be, I believe he and his brothers had put aside the balance of the proceeds of sale of these properties, probably in some bank accounts, to meet their various expenses including investments in the stock market, of which again there was a dearth of information other than the Husband’s words that some money had been lost during the 2008 Global Financial Crisis, and hence whatever money he might have taken from these proceeds over the years, they must be part of his rightful share in the investments and not loans from his family to him, the amount of which, as evidenced by the pay-in-slips referred to above (B : 122 – 141), in fact varied from time to time instead of a fixed monthly sum as alleged by him. I therefore do not believe that he is in debts to his family.

64.  This then takes me back to the other debt of his due to Standard Chartered Bank for the loan of HK$100,000 for his study programme, the monthly repayment of which at HK$3,110 that he claims to be preventing him from keeping up with his maintenance for the children under the current order. A question therefore arises : If he indeed has additional financial resources from all these investments, as what the Wife has all along suspected and as I have now found, why then would he still have to borrow this loan from the bank?

65.  The Wife of course suspects that it was a deliberate attempt by him to increase his financial burden and expenses so as to justify his application to reduce his maintenance for the children. Given the close proximity in time between her judgment summons and his loan, I cannot blame her for her suspicion, and it would be enlightening to consider the following chronology which are not in dispute.

66.  In January 2008, if not earlier, the Husband decided to enrol for the course of Bachelor of Business (Management) offered by RMIT University, as he said was required by his employer, and that he was informed by the Hong Kong Management Association on 21^st January 2008 of the total tuition fees for the 12-month course of HK$79,200 payable by 4 instalments of HK$19,800 each (B : 156).

67.  On 31^st January 2008 he was informed by RMIT University that his application for the programme had been successful, and that he was required to pay the 1^st instalment by 11^th February 2008 (B : 153).

68.  On 6^th February 2008 he paid the 1^st instalment (B : 154), whereupon RMIT University confirmed his acceptance to the programme and set out the due date for the remaining 3 instalment, namely 15^th May, 14^th August and 13th November of 2008 (B : 155). While this document does not appear to be dated, judging by its contents one can assume that it was probably issued shortly after receiving the Husband’s payment, it therefore follows that he must by then have been fully aware of his commitment to these payments.

69.  On 26^th February 2008, as noted above the Wife issued her judgment summons for arrears of children’s maintenance against the Husband, which was served on him on 8^th April 2008.

70.  On 5^th May 2008 the Husband’s application for the said loan of HK$100,000 was approved by the Standard Charted Bank (B : 143), which was paid into his account with the same bank on 21^st May 2008, with the monthly repayment of HK$3,110.62 to start on 21^st June 2008 for 36 months with the last payment on 21^st May 2011(B : 148).

71.  It would therefore appear that the loan was obtained only after the Husband became aware of the Wife’s judgment summons, which raises her question of why was the loan not applied earlier in February or March when he already well knew about the due dates of the remaining instalments if he indeed needed a loan to meet these payments, and hence her argument that it must have been deliberately created to increase his liability after learning of her judgment summons.

72.  As already noted above, I do not find anything suspicious about the Husband’s decision to undertake that study programme, as the evidence shows that he has in fact at least since 2005 been taking various courses run by the Hong Kong Management Association in connection with his job (B : 159), but I agree with the Wife that for the points raised above, the loan indeed looks suspicious?

73.  After all, given the relatively insubstantial sum involved for each instalment and with the last instalment due only towards the end of the year, and bearing in mind that he was at that time not paying any maintenance for the children, or was paying only less than half of the amount under the order, he could not be said to be in financial difficulty, and if indeed he were, he could have easily gone to his family for help, as he claims to have done for years, instead of borrowing from the bank where he would have to pay for various expenses and interest? There was simply no logical explanation from the Husband.

74.  Like everything else about his dealings in those properties, I cannot help but having grave reservation over the Husband’s evidence on this loan and his alleged consequential inability to pay as much maintenance for his children as before, of which I believe in reality just boils down to the fact that he thinks he has already done enough for them all these years, and that it is time that he be allowed to save some money for himself, a sentiment which one can easily read from his many affirmations, and is typified by his attempt to slip in an application in his closing submission that the children’s maintenance, irregardless of the outcome of this application, should cease when they reach their age of 18, whether or not they may still be receiving full-time education, as originally stipulated in the maintenance order.

75.  This attitude of the Husband can be further gleaned from his Form E of 4^th July 2008 when in fact he was the one who first proposed that the former matrimonial home at Kingswood Villas be sold as soon as possible so that he could use the money to pay off his debts (B : 108-1) even before the Wife had launched her application for the same proposal.

76.  However, once he learnt of the Wife’s intention to seek a review of the children’s maintenance after the sale as they will have additional rental expenses, he then changed his mind and objected to the sale, instead insisting that the sale be postponed until the children have completed their education, conveniently forgetting about his constant complaints of his ever increasing debts and his urgent needs to repay his family. This in my view just about sums up his attitude towards his children’s maintenance. I shall now turn to the Wife’s financial position and the children’s needs

Wife’s Financial Position

77.  There is no dispute over her only income as a civil servant which now stands at HK$29,326 per month including education and school passage allowances, nor is there any issue that she has no assets other than little savings, her ½ share in the former matrimonial home and her government pension receivable upon her retirement in 2021. It is her alleged expenses at just over HK$57,000 per month (B : 25 – 26), specifically those of the daughter in boarding school in UK at more than HK$25,000 per month that the Husband takes the most issue.

78.  The Husband’s main complaint, as I understand it, is in fact not so much over whether the daughter requires that amount, but rather about the Wife’s decision to send her to boarding school in September 2007 without regard as to whether they could financially afford to do so.

79.  The Wife’s case, however, is that in early 2007 she already approached the Husband for his consent to send their daughter to boarding school, as she was then already in an international school in Hong Kong and the plan was that she should further her studies in UK in the fall of that year, and while the Husband had initially made no response to her request, he eventually gave his consent without any complaints in May 2007 (B : 220), in which case I fail to see how he can now, 3 years down the road, argue that the Wife had decided herself to take upon such a heavy burden without consulting him.

80.  While I note that the daughter’s monthly expenses at some HK$25,000 per month are in fact more than the basic income of either of her parents, it is however not the basis of the Husband’s application before me. In other words, he is not arguing that her expenses are so high that he cannot afford to pay for them, but rather that because of his own needs, he cannot even pay the maintenance under the current order.

81.  In considering his application, I must of course also have regard to those matters and circumstances referred to in Section 11(7) of MPPO, including any changes thereto, and that must mean the daughter’s present needs, and for that matter, the son’s too, but the Husband’s alleged financial difficulties, if indeed true, can in my view be resolved, at least to large extent if not altogether, by the sale of the former matrimonial home, the 2^nd matter before me.

Matrimonial Home

82.  The Wife believes that the property can be sold for at least HK$1,600,000, there having been offers to her property agent at that amount, as she claimed in her 3^rd Affirmation of 12^th January 2010 (B : 289). As noted above, that was initially also the Husband’s desire when he made that proposal in his Form E so that he could use his share of the sale proceeds to pay off his alleged debts (B : 108-1).

83.  He in fact repeated his proposal in a letter dated 4^th December 2009 when he indicated his agreement to sell the property so as to settle the Wife’s claim and her legal costs, but imposed the condition that after the sale the Wife shall not apply for any increase to the children’s maintenance to include their share of the rental expenses if she were to rent their accommodation afterwards (B : 389-28).

84.  It is the Wife’s case that while she does not accept that the Husband would need his share of the sale proceeds to settle her claims, as she believes he has other resources, the sale would be a practical solution to resolve their financial problems, as her own debts have grown to more than HK$270,000 from 2 loans from Standard Chartered Bank and Bank of China (B : 389-18 - 24).

85.  These loans, she said, were obtained mainly to meet the daughter’s school fees and expenses in UK, and that in a couple of years she will enter university, be it in UK or back to Hong Kong where is would be cheaper, it will still mean another substantial expenses, hence she also needs her share of the sale proceeds to pay off her debts and to meet the daughter’s future university expenses.

86.  If the property can be sold for HK$1.6 million, or possibly higher given the rise in the property market since 2009, each party will get at least HK$800,000 which will no doubt go a long way reducing their financial burdens and resolving some of their problems. While there is no question that the Wife will then have to find alternative accommodation, and that whether she is going to buy another property or simply to rent to house the children remains to be seen, but I am unable to find any valid reason in the Husband’s objection to the sale or to impose his said conditions, even if it means that the children’s maintenance may have to be revisited again afterwards.

87.  According to her said 3^rd Affirmation, the children’s maintenance agreed between the parties at HK$5,500 per month under the said order was made on the basis that they were then residing in the former matrimonial home, and hence no accommodation expenses were included in that agreed maintenance, and that even during the time when she and the children subsequently moved into rented premises at Yau Tong to suit the children’s schooling and the matrimonial home was then let out, the Husband had always allowed her to keep its rental income, knowing that she needed it to provide a roof over the children’s head.

88.  Same reasoning should now apply, she argues, if she is to rent to house the children upon the sale of the matrimonial home, and I do not see how the Husband can use the excuse that he may end up having to pay more towards their maintenance to block the sale. Whether that possibility will eventually materialise depends on many things, including what would be the ultimate sale proceeds, what sort of premises the Wife will end up renting, how much would it cost, how much more, if any, will that impact on the children’s expenses, and if so, whether he can afford to contribute towards such increase will in turn depend on his financial situation including what will be left of his share of the proceeds, and so on but many of these questions simply cannot be answered at this stage.         

89.  While it is true that the Wife did provide some information as to the children’s future needs and expenses in her 3^rd Affirmation in paragraphs 11 – 14 (B : 389 – 8 – 9), such as the daughter’s university expenses or the range of rental expenses if she is to rent in the Tin Shui Wai area to suit the son’s current school, they remain at best her estimation or prediction only at this stage. The only way to be sure must be after the property has been sold, that the parties have received their share of the proceeds, and that the Wife has rented, and in the absence of any agreement between the parties the matter should simply be brought back for review by the court. 

Conclusion

90.  For the reasons detailed above, I am not satisfied that the Husband has frankly or fully disclosed his interests in those 4 properties, nor am I satisfied that he has demonstrated any justification in reducing the children’s maintenance under the current order, as such his application is therefore dismissed.

91.  Accordingly he is therefore in arrears of the children’s maintenance in the total sum accumulated up to November 2010 at such sum to be verified between the parties or by the Wife by way of an affirmation, of which I would allow the Wife’s application for a charging order against the Husband’s interest in the former matrimonial home and to be set off against his share of the sale proceeds.

92.  It follows that I order that the former matrimonial home be sold as soon as possible, and that after making the deduction for the said arrears in maintenance mentioned above, the balance of the sale proceeds be paid into court for directions as to their distribution given the Wife’s application for review of the children’s future needs and expenses after the sale, and the parties’ other disputes over various loans said to have been incurred over the said property during the marriage including the one which the Husband allegedly obtained from his mother for the down payment, and another one allegedly made for the Wife’s brother which have yet to be resolved.

93.  Lastly, costs should follow the event and hence the Husband is to pay the Wife’s costs to be taxed if not agreed, but given that the Husband has all along been unrepresented, I do not think that the Wife can justify a certificate for her counsel.