M v. M

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 4070 OF 1990

_________________

_________________

_____________________

J U D G M E N T

_____________________

1. This is the Petitioner Wife’s application for increase in periodical payments provided for in her favour under my order made on 30^th July 1998 also pursuant to an application for increase, so this is the 2^nd application by the Wife since the dissolution of the parties’ marriage in 1991.

2. I do not propose to recite the history of this case here again, the details of which can be found in my said judgment of 30^th July 1998, but some background information would of course still be necessary, in particularly those which have developed since the said order of the past 8 years.

3. Upon the dissolution of their 20 odd years in marriage in 1991, the parties were able to settle their financial dispute amicably, which terms were subsequently made an order of the Court on 27^th August 1991.  It was, and I quote from my then judgment, “a comprehensive and detailed settlement with terms and conditions covering all the parties’ assets and properties as well as their future and long term needs and obligations and those of the children”.

4. The terms of the settlement can be found in the 12 pages of the said order reproduced in my said judgment (B1 : 51), which I do not propose to go into in details here at this stage, suffice it to state that under the terms, the Husband was to pay to the Wife, which he did, a lump sum of HK$2 million by instalment within 2 years, and periodical payment at the rate of HK$16,250.00 per month in advance for her maintenance, such sum to automatically increase annually by the lower of the Retail Price Index in whichever country she resided or his increase in salary, and periodical payments at the rate of HK$1,250.00 per month for the benefit of each of the 2 children of the family, a son and a daughter, with the same annual adjustment as the Wife’s, until each child reached the age of 18 or completed full time education whichever was the later, but in the case of the daughter L, who was mentally and physically handicapped due to some congenital defects at birth, until she was able to support herself and live independently.

5. These periodical payments for the children were in addition to the Husband’s undertaking to pay for their school fees and all educational and school expenses in boarding school in UK, their clothing and pocket money, and their airfares to and from Hong Kong at the end of each of their school term.

6. It is also relevant to mention here that in the settlement, the parties also agreed that their joint property in UK known as Bury Farm was to be maintained for use by either of them and their guests while they were living outside UK, and that upon the Wife’s decision to return to live permanently in UK, she was to have the option of exclusive use of the property as her principal place of residence with the children, while the Husband was to continue to be responsible for the mortgage, property tax, utilities and general maintenance of the property.  In the event that the Wife returned to UK but did not take up occupation at Bury Farm as a principal place of residence, the Husband agreed to provide and pay for an accommodation for the Wife as an alternative to their former matrimonial home in Hong Kong, which was a 3,000 sq ft garden house in the Discovery Bay, Lantau Island, and to pay for the household utilities expenses, property tax and general maintenance of such accommodation.

7. In 1994 the Wife decided to leave Hong Kong to return to UK where she came from, and reached a new agreement with the Husband on periodical payments at the monthly rate of £2,336 for her maintenance, £110 for the son and £180 for the daughter, with the same annual increment as before.  This agreement was subsequently made an order of the Court on 6^th August 1994.  She then left Hong Kong for New Zealand where she stayed for a while before returning to live permanently in UK in or about April 1995.

8. Instead of taking up residency in Bury Farm in UK, the Wife sold her interest therein to the Husband for a sum of £173,577 and purchased a house at Farrer Top, St. Albans, England as her home.  She also purchased a property at Duich House in Scotland with a Mr S intending for a quick sale after renovation but subsequently turned it into a bed-and-breakfast type guest house which she would run with S during the tourist season.

9. 2 years later in August 1997 the Wife applied to this Court for increase of the monthly maintenance for herself and the daughter L, who was then already 18 but still undergoing schooling.  The son was already 23 and had finished his education and hence was not involved in that application.

10. In that application the Wife claimed that when she reached the financial settlement with the Husband at the time of their divorce in 1991, she based her figures of the periodical payments for herself and L on rough estimation only as she never had the experience of running a home in England, and hence some of her figures had since either been overtaken by inflation or proved to be incorrectly low.

11. She also claimed that she had hope to find work on her return to UK so as to supplement her maintenance but such prospect had been hampered by L’s condition which had required more care and attention for her then expected, while her bed-and-breakfast business with Mr S in Scotland had turned out to be profitable.  Furthermore, as she found her 3-bedroom house at Farrer Top too small for her and the children during their visit, she was therefore thinking of selling it for a bigger 4-bedroom house which would be more expensive, and hence she sought an increase in the annual periodical payments to £49,802 for herself, £8,010 for L and an additional annual sum of £2,500 for home help service when L was staying with her during term breaks.

12. Her application was opposed by the Husband, who was then, and still is, a director of the publicly listed CP Limited at a total yearly pay package of between HK$12 – 14 million plus the use of company car, medical coverage, life insurance and air fares, and who had since re-married and resided with his wife in a $20 million flat in Hong Kong.  He also owned substantial amount of shares in CP purchased by a VM 1995 Trust, an offshore discretionary trust of which he was a beneficiary.  While it was accepted that most of his annual bonus had been used to repay the huge bank loans he obtained for the purchase of the shares, the main issue of that application was rather more on the reasonable needs of the Wife and her daughter than the Husband’s ability to pay.

13. At the end of the trial which lasted 6 days, I increased the Wife’s periodical payment to £3,000 per month for herself, £300 per month for L, and additional sum of £2,000 per annum for home help services for L.  It is this order that the Wife now wishes to seek an upward variation.

14. Her case is that as there was no index linking included in the said order, so that the periodical payments for her and L have not been properly adjusted all these years to meet their rising needs and inflation, while her income from interest earned from bank accounts in fact amounted to an average of only slightly over £4,000 per year, instead of £6,000 as originally anticipated in the order, due to less savings after payment of her legal costs as well as UK income tax changed on her earned interest, whereas her bed and breakfast business in Scotland was finally closed in late 2003 after years of her decreasing input especially in 2003 due to her father’s terminal illness, with the sale of the Duich House later in the same year.

15. As a result the Wife says she has over the intervening years had to cut back on her expenditure to stay within her budget to ensure that she does not unnecessarily eat into her capital, although she has found that she has by necessity already spent some of her capital on living expenses.

16. Since the closing of her bed and breakfast business in Scotland, the Wife says she has not worked and that as she is now already 56 and with very limited earning capacity, she says it would even be more difficult now to find any work that would provide her with more than just pin money.  This is another reason, she says, for her to sell her Farrer Top Property and to use the sale proceeds together with the bulk of her savings to buy a bigger house where she could perhaps run another bed and breakfast business, which is the area of which she has recent experience, although she is afraid that since it is a physically demanding occupation, she is uncertain as to how long she could sensibly continue such a business if at all.  In any event, based on her past experience, she does not think that such income will be large.

17. She also claims that since her father’s death in 2004, her mother has been unwell and at one point was completely incapacitated.  As her only child, it has become necessary for her to keep checking up on her mother and to spend more time with her, which would make a job with regular hours very difficult to maintain.

18. L too, the Wife claims, has required more input from her over the past 12 months since her move last year into semi-independent living in Care Accommodation has necessitated more frequent visits by her to her place at Brighton as L now has less staff hours and has had difficulty in adjusting to living in a flat on her own.  The Wife claims that she has therefore recently undertaken to visit her on a more regular basis as at present she is insistent on returning home during the holiday and half term periods, and therefore she believes that L will require more parental support from her to help her to achieve independence, which further makes it more difficult for her to find and keep a regular job at this stage of her life or in the near future.

19. While she accepts that L now receives Government benefits which at present cover her general living expenses, the Wife claims that the benefits actual leave only £7.20 for L’s clothes, holidays, presents, hygiene and other personal items which is clearly insufficient now that the Husband has stopped paying the periodical payment of £300 per month for her under the said order after L started to receive support from the local authority, which he believes makes her finally independent, as a result she has to incur £4,460 per year as direct expenditure on L.  She therefore asks for a further £4,700 per annum, in addition to her own maintenance, which includes an extra £200 per annum for unforeseen or unusual requirements.

20. The Husband accepts that there has been no increase to the Wife’s maintenance as it was no longer index linked under the order of 30^th July 1998, but that even if the index linking had remained, there would still have been no increase as his salary has not increased since then, although he admits that his overall income did increase over the years.

21. As regard the Wife’s income earned from her savings, the Husband accepts that it might have been less than anticipated after taking into account of the tax implication, but he believes that position no longer pertains as the Wife’s capital position has now been substantially improved as a result of her sale of the Duich House and Farrer Top, bringing her total capital to more than £565,000, a huge improvement since 1997 when it was only £329,000.

22. While accepting that it is not for him or indeed the Court to dictate to the Wife what she should do with her capital, he does not agree that she can justify spending the bulk of her capital on a bigger property, and argues that the Court should treat her capital in larger part, if not in total, as an income generating asset.  On this basis he believes that the Court should allocate a maximum of £265,500 to a property to be purchased by the Wife, making the balance of £300,000 available for income generating investment, which he believes could earn the Wife at least 5% per annum gross, and should generate an income of £15,000 per annum gross, or £13,400 after tax.  This, he says, should be more than sufficient to cover the deficit that she might have over the years caused by the lack of annual adjustment to her maintenance over the years.

23. As to the Wife’s present alleged expenditure, the Husband believes that she has used figures on the basis of what she would like to spend rather than on what she actually spends.  He claims some of these figures are useless or irrelevant, while others are exaggerated, and should not be accepted by the Court as correct or accurate.

24. As for L, the Husband is convinced that she is now financially independent and therefore the monthly sum of £300 for her is no longer necessary, which he ceased in July 2005 and which he says that the Wife does not seriously seek its re-instatement, but instead she seeks to claim L’s related expenses in her own claim despite the fact that many of them are already claimed in and covered by her existing maintenance payments, such as travelling expenses and food.

25. Furthermore, the Husband claims that he has in fact paid for many expenses related to L that were not mentioned in the 1998 order, such as special classes, telephone, new computer, medical expenses and the costs of furniture in L’s flat, in addition to a payment of a monthly sum of £100 into a savings account intended for her in due course.

26. As for himself, the Husband claims that his financial situation has became worse as he had relinquished his responsibilities as the Chief Financial Officer of CP in April 2005 to enter semi-retirement.  He remains an executive director of the company with a basic salary of about HK$150,000 per month but can no longer expect to receive the same level of bonuses as in the past.

27. On the other hand, he claims that his responsibilities have increased since 1998 as he has a 7 years old daughter while his mother-in-law now lives with him and his wife in Hong Kong.  He says he expects to use his capital to support himself and his family and cannot reasonably be expected to continue to pay money to the Wife forever, when she has the financial resources to support herself.

The Law

28. I already set out the law governing the application in my earlier judgment of 30^th July 1998 when dealing with the Wife’s first application for variation, but as it appears that there are some issues over the interpretations of the law on this occasion between the parties, it would be useful to discuss it in more details.

29. Our stature governing this application has remained the same and is to be found under s. 11 of Matrimonial Proceedings and Property Ordinance, Cap. 192, in particularly relevant under subsection (7) which provides for the manner in which the Court is to proceed as follows : -

“ …… 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 …… “

30. So with the powers contained in this subsection, how then should the Court approach such an application?  It would be helpful to first refer to Jackson’s Matrimonial Finance and Taxation, 7^th Edition, Chap. 3.131 which summarised both the old and modern approach : -

“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”.

31. The limitations of the old approach adopted by the English Court of Appeal in Foster v Foster [1964] 3 All ER 541, CA, were commented on by another Court of Appeal in Lewis v Lewis [1977] 1 WLR 409, and was ultimately rejected when Ormrod LJ said this : -

“In that case the view seems to have been taken in this court that that in effect confined the powers of the court when dealing with an application to vary to considering the amount of change in the actual means of the parties, so that the new order should merely be increased or decreased roughly in proportion to the change in the means.  Be that as it may, it is unnecessary now, I think, to comment upon that any further because the section with which we now have to deal is in markedly different terms.  The relevant section now is section 31 of the Matrimonial Causes Act 1973 which by subsection (1) gives the court the same powers to vary, and in subsection (7) provides :

“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 …… ”

So what we are now required to have regard to are changes in any of the matters effectively mentioned in section 25 of the Act of 1973.

I am bound to say that it has always seemed to me, with respect, that the powers of variation, which were given by statue 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”.

32. This modern approach was followed by Garner v Garner [1992] 1 FLR 573, CA where the wife obtained a consent order which provided inter alia, that the husband should pay to her for the benefit of each of the 2 children of the family the weekly sum of £15 until each child attained the age of 17 years or cease full-time education or further order.  More than a year later, the wife applied for a variation order to increase the periodical payments to the children.  The registrar increased the payments to £18.50 per week for each child.  Dissatisfied with the amount of the increase of £3.50 per week for each child, the wife appealed to the judge, who dismissed her appeal on the ground that, once the wife had proved a material change of circumstances, he was not entitled under s. 31 (7) of the Matrimonial Causes Act 1973, as amended, to consider the totality of all the circumstances of the matter afresh, but had to confine his discretion solely or essentially to the actual change in circumstances since the making of the original order.  The wife appealed to the Court of Appeal.

33. In allowing the appeal, the Court of Appeal held that 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 : -

“By the Matrimonial and Family Proceedings Act 1984 there has been, as I have indicated, a new substituted subs (7) of s. 31.  This requires the court, in having regard to all the circumstances of the case, to give first consideration to the welfare, while a minor, of any child of the family.  This requirement of primacy being given to the welfare of the child re-emphasises the court’s powers to step outside any actual changes which may have occurred and look at the totality of the circumstances, without being confined solely or essentially to matters of change.

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”.

34. In Flavell v Flavell [1997] 1 FLR 353, 357B, CA, while affirming the modern approach, Ward LJ said this : -

“The judgment as a whole makes the court’s approach on an application to vary quite clear.  Whatever may have been the position under the Matrimonial Causes Act 1950 which, in its terms as set out in s. 28, seemed to emphasise that the primary consideration was the increase or decrease in the means of the parties, the language of the 1973 statue has been established by several judgments of this court – including Garner itself, and, preceding Garner, Lewis v Lewis [1977] 1 WLR 409 – to be that the court does have a discretion on an application to vary, and that the court is not required to proceed from the starting-point of the original order but looks at the matter de novo”.

35. So in Primavera v Primavera [1992] 1 FLR 16, CA where the Court of Appeal approved Booth J’s increase of the wife’s periodical payments, some 13 years after the parties’ divorce settlement, to £28,000 per annum when her estimate of annual expenditure was only £22,602, that that sum should be raised having regard to the husband’s financial statue and to the marked disparity in wealth and financial security between the parties since their divorce.

36. Similarly, in Cornick v Cornick (No. 2) (1995) 2 FLR 490, CA, where since the original order there had been dramatic increases in both the husband’s resources and the wife’s budgetary requirements, the Court of Appeal approved Hale J’s increase in the wife’s periodical payments for herself and the 2 children of the marriage from £28,400 per annum to £52,000 per annum which was roughly half way between the amount of £59,000 which would have been proportional to the husband’s increase wealth and the wife’s now budgetary figure of £47,000.

37. These cases show that the court can take into account an increase in the wealth of the payer, in the same way as a decrease in, for example, the income of the payer when the payee would not be able to argue successfully against a downward variation of the maintenance payable.  This must, in my judgment, be within the meaning of the statutory requirement under s. 11 (7) to 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 under s. 7 (1) (a) to (g) when making the order to which the application relates.

38. The basis and intended effect of the original order are, of course, also relevant factors or circumstances to which the court should have regard, as in Boylan v Boylan [1988] 1 FLR 282, 289 when Booth J said : -

“the court should not adopt an approach which differs radically from the approach taken by the parties themselves in assessing quantum of maintenance when the original consent order was made”.

39. The same approach was also adopted by the Court of Appeal in Richardson v Richardson (No. 2) [1996] 2 FLR 617, 628 when Balcombe LJ said : -

“ ……  Given the existence of the 1988 consent order fixing finite terms for periodical payments, it was not wrong for the judge to refuse to depart from the principle of finite term.  This was not a case where, after the making of the consent order, some unforeseen catastrophe intervened.  The wife’s health was always known to be fragile, yet she accepted the finite payment.  Her ill-health is attributable to the continuing litigation for which she has been at least as much responsible as the husband.  There are here only two issues of principle : first, giving effect to an agreement whether or not embodied in a consent order and, secondly, having an end to litigation.  I can find no error of principle by the judge in extending the time here for another five years making 11 in all from the 1988 order.  I can find no error in principle in fixing the quantum at £12,000 per annum.  I would dismiss this appeal”.

40. Above all, as confirmed by the House of Lords in White v White [2000] 3 WLR 1571, the objective of the legislation for the courts when exercising these wide powers under Subsection (7) must be, in my judgment, the same as for all ancillary relief applications : to make fair financial arrangements on or after divorce between the former spouses, and to ultimately achieve a fair outcome  With these principles in mind, I shall start the exercise with the Wife’s evidence as to her situation.

41. First I propose to deal with the relatively straight forward issue over the index linking of the Wife’s periodical payment.  In the original order containing the parties’ settlement at the time of the divorce, it was stated clearly that the periodical payments payable by the Husband to the Wife was to be automatically increased annually by the lower of the Retail Price Index in whichever country the Wife resided or the Husband’s increase in salary.  The same index linking was also to be provided for the periodical payments for the 2 children of the family.

42. In August 1994 when the Wife left Hong Kong to return to United Kingdom and agreed with the Husband to vary the monthly periodical payments for herself to £2,335 and £180 for L and £110 for the son S, which agreement was then made an order of the Court on 6^th August 1994, with the same index linking to these periodical payments.

43. In 1997 when the Wife applied for variation of maintenance, it was clearly stated in her application that it was for increase of the maintenance for herself and L, as S had then already become financially independent.

44. There was nothing in that application, or indeed in any of her supportive affidavits, to indicate that she wanted to vary the index linking as well.  Nor was it, for that matter, in any of the Husband’s affidavits either.  In fact, as evidenced in my judgment of 30^th July 1998, it was never an issue at the trial and, although there appeared to be some confusion about a subsequent application issued by the Wife on 15^th September 1998 over index linking, which was never formally dealt with as it was subsequently withdrawn, I fail to see how all these could be interpreted that the index linking to the periodical payments for the maintenance of the Wife and L had been altered or deleted from the order as a result of my judgment.  Like all the other terms, undertakings and orders in the original settlement which were not the subject matter under the Wife’s application of 1997, the original index linking would have remained unchanged in the order, as it must have been the parties’ intention at that time, as was mine, and hence the periodical payments for the Wife and L should have been adjusted accordingly after 1998.

45. Unfortunately, no detailed information on Retail Price Index annual changes have been provided as evidence on this occasion, but relying on the Wife’s exhibit “AEM-12” (B1 : 296), it seems that the total Retail Price Index has risen by 18.5% from 1997 to 2004, or 17.6% if one were to exclude mortgage repayments, giving an average of about 2.2% increase per annum.

46. As the index linking under the original order was to be the lower of the Retail Price Index or the Husband’s increase in salary, so even though there has been a 2.2% annual increase on average in the Retail Price Index, there has been no increase to the Husband’s salary all these years, so in taking the lower figure, it would appear that there should be no increase to the periodical payments on the straight interpretation of that clause.

47. However, it was also the Husband’s evidence in the hearing of the Wife’s 1997 application, and I believe it is still the case, that his company’s remuneration policy for senior employees was to fix their salaries lower than many other companies and to award bonuses instead, depending of course on the company’s performance.  Therefore for the year 1996 / 1997, although his salary was only $2.02 million, he received additional sum of more than $10.5 million in director fees and bonus, and for the following year of 1997 / 1998, while his salary remained more or less the same at $2.08 million, his total bonus and director fees exceeded $12.5 million, and hence he had always increased his maintenance for the Wife annually in line with the UK’s Consumer Price Index since her return to UK up to the time of her 1997 application, as the record of his evidence shown in my judgment (B1 : 48, 68, 69 – 70).

48. Furthermore, even though his salary may not have increased since 1998, the Husband accepts that his total income has in fact recorded an increase for 5 years over the past 7, and that in applying the index link in the original order to these income increases, the 1998 award would have increased by 14.27% over the years, bringing the Wife’s periodical payment to £40,138 for the year of 2004, and remaining at the same amount in view of the fact that there had been no increase to his income in 2005.

49. While this figure of the Husband in fact comes very close to the figure of £40,104 which she claims she spent in 2004, the Wife says that although some items of her expenses may well have increased by the UK Retail Price Index of approximately 19%, this official figure in fact does not reflect what has actually happened over recent years with other items, and she has given various examples of such items in her 1^st affidavit (A1 : 47, 61 – 64), which she claims to in fact give an average increase by as much as 69%, which demonstrates the level of the significant cut backs that she has necessarily had to make over the past few years in order to ensure that she stays within her maintenance budget.

50. In her same affidavit the Wife also set out what she believes her expenditure would have been had she not had to economise due to the very real decrease in value of her maintenance over the past years, most of the figures she relies on are based on 2004 prices, and that the total figure would come to just below £60,000, at £59,566 (A1 : 65 – 79).

51. She further argues that if her maintenance was to be increased instead on a blanket basis using Average Earning Index (AEI) of 33%, the total would amount to £54,838, and that even using the lower figure of the Retail Price Index at 19.6%, the total would be £49,313, which would still fall short of her projected figure, not to mention the amount under the 1998 order.

52. This approach of the Wife is rejected by the Husband who argues that she has used figures on the basis of what she would like to spend rather than on what she actually spends, which was only £40,104 in 2004 according to her own evidence, that some of her expenses such as motor and transportation are exaggerated, others such as entertainments, outings for dinner, theatre, exhibitions, travels as well as gifts and presents for the children are either unrealistic, extravagant or unnecessary.

53. He also submits that now that she has sold Farrer Top and intends to buy a property where her related expenses are lower renders useless and irrelevant the figures she presents for a larger number of items, which makes it impossible for the Court to rely upon them.

54. As aforesaid the Wife has in her affidavit of 9^th September 2005 set out in enormous details the manner in which the costs of the life she was able to afford and was contemplated at the time of the 1998 order has increased, and has methodically been through the list of such expenses considered in my 1998 judgment, explaining the increases and the reasons therefor.

55. This evidence of the Wife, unlike at the last occasion in 1998, did not appear to be seriously challenged by the Husband at this hearing by cross-examination, other than his challenge of some possible double accounting of her petrol expenses.  This is because, as aforesaid, of his argument that she has used figures of what she would like to spend rather than on what she actually spends.  So the question is : Is the Wife entitled to claim what she would like to spend rather than what she actually spends ?

56. This argument of the Husband that, according to the figures provided by her, she has been and is able to live within the provision as ordered in 1998 is countered by the Wife that, quite rightly in my judgment, with her limited capital, which she dares not waste, she has been forced to reduce her standard of living in order to remain within the limits of the support provided for her, especially when it has not been index linked or adjusted annually as before since 1998.

57. It is, as submitted by Mr Pilbrow for the Wife, a “chicken and egg”, and if I may add, a “no-win” situation as well, faced by many former wives wholly dependent on continuing financial support from their former husbands.

58. It is, however, also clear from the authorities such as Dean v Dean [1923] P 172, followed by Sansom v Sansom [1966] P 52 [1966] 2 ALL ER 396 where it was said by Sir Jocelyn Simon P that if the over-all figure is correct, it is no business of the court or the husband (or former husband) how the wife lays out her money, and in particular what proportion she devotes to current consumption and to provision for the future.  Also see Duxbury v Duxbury [1987] 1 FLR 7, 13 CA where a lump sum was awarded to meet the wife’s reasonable needs : “How she spent her money was her affair” per Ackner LJ, and Boylan v Boylan [1988] 1 FLR 282, 288, per Booth J : “The wife’s needs constitute only one fact to which the court must have regard and it is well established that if a wife is thrifty that is not a reason for reducing the amount of payments to her, anymore than it would be a reason for increasing them were she a spendthrift”.

59. Furthermore, it is submitted on behalf of the Wife that the Husband has also not otherwise challenged her evidence with regard to the expenses incurred by her arising as a result of her continuing care of L, and therefore in the light of the authorities mentioned above, the Court should accept her evidence as to her needs and expenses including those she has spent for L, which pale into insignificance when compared against the Husband’s income and general wealth, which is my next consideration.

60. While it is not disputed that his taxable income may have dropped significantly, the Wife believes that it still amounts to nearly half a million pounds per annum, with a further £250,000 from income generated last year by his VM 1995 Trust from dividends held in CP shares.  This she says does not take into consideration the potential rental income of his Albany property, the investment return on the capital generated from the sale of Bury Farm, or his apartment in New York.  She believes that with such income and assets the Husband can well afford any order which the court may deem reasonable without causing him any hardship.

61. Although the Husband might not have been as forthcoming with details of his assets as to the Wife’s liking, it is his evidence that he has used his income to repay $40 million of the debts incurred for the purchase of his shares in CP so his net worth has increased since the 1998 order, and that his present wife is also apparently of some means having herself paid off the mortgage of their home at Heng Fa Villa.

62. Mr Pilbrow for the Wife has prepared in his final submission a schedule of the values of the Husband’s assets, which was not challenged and which I accept to be consistent with the evidence before the court, which include his shares in CP, his interest in the Heng Fa Villa, the proceeds of sale of Bury Farm, his half share in the proceeds of sale of the Bellair property in New York, as well as his other investments and cash at bank, all of which give a total worth of more than HK$110 million, which is quite a significant increase from his position in 1998 indeed, a change which I cannot ignore in the light of the authorities mentioned above.

63. I accept that the Husband may be entering semi-retirement and that eventually he will have to rely on his capital to support himself as well as his wife and daughter to whom he has a long term obligation and responsibility, which is however no more than what he has for his former wife, and with the assets that he has, I agree with the Wife that he can certainly afford, without any difficulty, any adjustment to the periodical payments that the court may deem reasonable.

64. It is however also the Husband’s argument that, before deciding on what increase, if any, should be allowed to the Wife’s maintenance, it is necessary to consider her earning capacity and her income including those earned from her capital.

65. In my 1998 judgment I did not think at that time her earning capacity was significant enough to be taken into account.  Some 8 years down the road and at her present age of 56, I have not seen anything to change my mind.  When the marriage ended in 1990 that resulted in the original settlement, I believe that it was never the intention of the parties that the Wife would be expected to work after the divorce, in particularly with her continuing responsibilities towards L.  There is simply nothing in that settlement to suggest otherwise, and there is nothing in the evidence now before me to suggest that that situation should change, in particularly now that the bed-and-breakfast business has gone with the sale of the Scottish property.

66. This of course does not necessarily follow that she has no other income that may be taken into account, in particularly now that she has sold both the Farrer Top and the Scottish property, giving her a total capital of slightly over £565,000.

67. She has however indicated that she wishes to purchase a bigger home for herself in the range of £350,000 – 450,000, in which case she says her investable capital will likely to remain at about £100,000, and even with a 6% return as income, after taking into account of the tax on such income, it is submitted on her behalf that in the circumstances it would be inappropriate for the Court to take such income into account, and taking the disparity of wealth between the parties, it would be fairer to allow the small income to accumulate on the Wife’s remaining capital.

68. The Husband accepts that it is not for him, or indeed the court, to dictate to the Wife what she should do with her capital, but he submits that he is entitled to ask the court to treat her capital in larger part if not in total, as an income generating asset.

69. In my 1998 judgment I did question the Wife’s justification for purchasing a bigger house to accommodate the children who spent relatively little time with her at that time, and I concluded that I should consider her needs and requirements based on her then situation only rather than on the basis that she would be living in a bigger home not just for that reason, but also because at that time neither Farrer Top nor the Scottish property had yet been sold and it was then entirely uncertain as to when they would be sold, and for how much.

70. Now that both properties have been capitalised, it is obvious that the Wife will have to purchase another property for her home, should she then be allowed only a maximum of £265,500, the value of Farrer Top, for such a property as suggested by the Husband, making £300,000 available for income generating investment?

71. On re-reading the original 1990 settlement, I agree with the Wife that the Farrer Top property was never purchased for or intended to be the final home for her and the children, as it was purchased while she was living in Hong Kong as one of the investments of her lump sum, it being her intention that she should reside at the much bigger and more expensive Bury Farm should she return to live in UK (Clause A (1) – (3) of the 1990 settlement : B1 : 51).

72. I accept that the Wife’s decision for a bigger house is not a matter which the court or the Husband should interfere with, and given the present circumstances and considering the increased wealth of the Husband and the resultant standard of living he is able to enjoy, I cannot say that it is unreasonable and hence what will be left of her capital after the purchase of the new house, whatever income she may be able to earn therefrom after deduction for tax would not be significant and should be allowed to accumulate on her remaining capital which is no doubt precious to her, it would therefore be fair and appropriate in the circumstances not to take it into account.

73. So what should be the proper amount of periodical payment for the Wife?  Had it continued to be linked to the lower of the Retail Price Index or the income of the Husband from 1998, the periodical payment would have been increased to £40,138 on the Husband’s calculation.  Had the UK tax been taken into account in assessing her income earned on her capital in the 1998 order, the periodical payment would have been further increased.

74. The Wife however argues that if her maintenance based on the original judgment figure of £41,232 was to be increased on a blanket basis using the Retail Price Index of 19.6%, the total would amount to £49,313, whereas the Average Earning Index of 33% would raise the amount even higher to £54,838, while according to her projected figures in the schedule exhibited to her 1^st Affidavit (B1 : 351 – 354), the total amount would, as aforesaid, come to the figure that she is now seeking : £59,566.

75. Any of the above proposed figures would amount to a very significant increase from the 1998 order, but for the reasons given above, and considering the position of the respective parties and their apparent lifestyle and standard today, as well as the continuing contribution the Wife has made to the family in her care and support of L after the divorce up to today, I think it would only be fair and reasonable that she should not be reduced to, in the words of Ralph Gibson LJ in Primavera v Primavera [1992] 1 FLR 16, 26, a standard well below that commensurate with the divorced wife of a husband of such financial standing as this Husband.

76. I therefore agree that her periodical payment should be increased and dated back to 1999, the year after the 1998 order, but I will not apply the higher Average Earning Index, partly because it was not used or relied on by the parties at that time, and also because it was not formally before me at this hearing.  It would instead be more appropriate and reasonable to rely on the Retail Price Index (excluding mortgage repayments) of 17.6%, giving an average figure of 2.2% per annum on the original judgment figure but which I would round down to £40,000 as the starting point after taking into account of the UK tax impact on the income earned on the Wife’s capital and its relatively small amount, and arrive at the following figures for the past 7 years : -

1999	£40,880
2000	£41,780
2001	£42,700
2002	£43,720
2003	£44,680
2004	£45,663
2005	£46,668

77. Should I therefore increase the Wife’s current periodical payment accordingly by simply applying the same average rate of 2.2% for this year?  Her evidence is that this average 2.2% in fact does not accurately reflect the increase in the costs of living in UK, and that the Average Earnings Index is more in line with the actual increase in the costs of living, but as aforesaid, although this Index was referred to by the Wife in her private correspondence with the Husband, for the reasons already given above, it would not be fair or proper to rely on it for the purpose of this application, leaving only the Retail Price Index as my guidance, but a careful reading of the Wife’s Exhibit “AEM – 12” (B1 : 296), the Daily Telegraph article of 3^rd May 2005 on the rate of inflation from 1997 – 2004 which gave a Retail Price Index excluding mortgage repayment of 17.6%, or an average of 2.2% over the years, it also shows that while the price of goods has been kept low generally, the costs of services have risen by as much as 29% since 1997.  To quote some of the examples given in that article which may be relevant to the Wife’s situation, car insurance has risen by 77%, petrol has risen by a third, other transport costs have been higher than inflation, and the price of a typical holiday has risen by 40%, while health costs have also seen substantial increase.  As the Wife has demonstrated with her figures, an increase of another 2.2% to the periodical payment will simply not be sufficient to meet her present requirements.

78. If not 2.2%, then what should it be ?  The Evening Standard article of 15^th December 2004 exhibited to the Wife’s same affidavit as “AEM – 15 ” (B1 : 356) offers some useful guidance.  It reported that inflation was running almost 7% in London while the rest of UK was up to 4.4% after adjusting the consumer price index to take account of various factors, and that it may continue to rise.  On the basis of all the information referred to and on the figures provided by the Wife, it would therefore not be unreasonable to adopt the figure of 5% for inflation today.

79. I accept some of her expenses such as travelling and motor may have been too high, and that the Husband is correct to say that her payment for St John’s air fare was unnecessary and should not have been borne by him, but her other expenses were never challenged by cross-examination and I do not find them excessive or unreasonable, in particularly given the wealth of the Husband and the lifestyle he has been able to enjoy.

80. I shall therefore allow a 5% increase to the Wife’s 2005 adjusted figure of £46,668 to arrive at a sum of £49,000 and then round it up to £50,000 which, together with any income she may be able to earn from her remaining capital after the purchase of her new house, should enable her to meet her reasonable needs and requirements, to which I agree should then be linked to a 5% annual increment.

81. As for the expenses which the Wife says she has incurred directly on L as she claims that the benefits from the local authority were clearly insufficient to meet her other personal needs, while some of such expenses may have been unnecessary or double-accounted in the Wife’s expenses, I accept her evidence that the benefits from the local authority are not sufficient for L, and given the fact that the Husband’s periodical payment for her has similarly not been index linked since 1999, as it would have been under the original settlement, and that since the Wife has always been the parent who shoulders the responsibilities that arise as a result of L’s conditions, and that L has always been dependent on her mother to provide such necessary support, in particularly with the Husband living thousands of miles away, I agree it would be appropriate that the Wife be given an annual sum of £2,000 to cover such of L’s expenses, one that I believe would also commensurate with the daughter of a father of such financial standing as this Husband.  This annual sum should also be subject to a 5% annual increment, but the Husband would be entitled to seek a regular account, perhaps quarterly from the Wife, of how she spends this sum on L.

82. Lastly, on the question of costs, as the Wife can be said to be generally successful with her application, she should therefore have her costs, and in view of the law involved in this difficult case, I agree she is entitled to instruct Counsel, as did the parties in 1998.  It shall of course be an order nisi, to be made absolute at the expiration of 21 days.

83. My orders are therefore as follows : -

1.       The periodical payments under the order of 30^th July 1998 for the Petitioner Wife be increased and backdated as follows, with credit to be given for amount already paid : -

1999	£40,880
2000	£41,780
2001	£42,700
2002	£43,720
2003	£44,680
2004	£45,663
2005	£46,668
2006	£50,000

2.       The said periodical payment of £50,000 per annum, payable by equal monthly instalments, shall be increased by 5% annually starting 1^st January 2007 until further order.

3.       The Respondent Husband shall pay a further sum of £2,000 per annum to the Petitioner for the benefits of their daughter L, which sum shall also be increased by 5% annually.

4.       Costs of and incidental to this application be to the Petitioner to be taxed if not agreed with Certificate for Counsel.  This is an order nisi to be made absolute at the expiration of 21 days.