SJH v. AMS

FCMC 5963/2016

[2022] HKFC 266

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 5963 OF 2016

----------------------------

----------------------------

----------------------------------------

JUDGMENT

(Attachment of Income Order)

----------------------------------------

Introduction

1.  This is an application taken out by the petitioner (“the wife”) by way of a summons filed on 27 July 2021 for an attachment of income order (“the AIO”) with respect to the amount of maintenance paid pursuant to an consent order dated 24 May 2018 (“the 2018 consent order”).  Whilst the wife is facing arrears of maintenance, she now seeks this be secured by an attachment of income order, the respondent (“the husband”) opposed.

Background

2.  Both parties settled their ancillary relief issues in the 2018 consent order, the wife says the husband is and was in breach of the order and is seeking the following sum to be attached, inter alia:

(i)     paragraph 3: The husband’s arrears of maintenance for the child from 1 June 2019 to 1 July 2021 in the amount of GBP58,983, to be paid to the wife with surcharge to be assessed.

(ii)   paragraph 3: The husband’s current maintenance for the child from 1 August 2021 onwards at GBP2,000 per month, to be increased to GBP2,200 per month upon the respondent commencing employment, be paid to the wife until the child attains 18 at which the maintenance shall be reviewed.

(iii)  Recital N: The husband’s current payment towards the child’s school fees by paying directly to [name of school] or any other educational establishment up to the conclusion of his tertiary education;

(iv)  Recital N: The husband’s arrears of payment towards the child’s education costs in the amount of GBP19,528 to be paid to the wife together with interest and surcharge to be assessed;

(v)   Recital L(iii): The husband’s arrears of payments in the sum of GBP34,390 being an amount realized from two trust funds to the wife with interest and surcharge to be assessed.

(vi)  Recital J(ii): The husband’s arrears of payment that he undertook to be responsible for all costs associated with a property in the United Kingdom and to indemnify the wife of any costs.

3.  It is worth to note the proceedings prior to this application. The wife has taken out two separate judgment summonses on 23 June 2020 and 7 December 2021 in respect of arrears of the above.  In between, on 27 July 2021, the wife took out this AIO application.  Two days later, on 29 July 2021, the husband applied to vary the terms of the 2018 consent order (Form 8 filed).  In the said Form 8, the husband is seeking to vary (i) to pay the wife nominal maintenance only; (ii) equal share of the child’s school fees up to his tertiary education; and (iii) payment of lump sum GBP34,390 pursuant Recital L (iii) be discharged; and (iv) costs of and liability of a landed property in United Kingdom be discharged.  The husband’s Form 8 was heard on 30 August 2021 before HHJ Melloy of which was adjourned to 20 September 2022 with an order to granting leave to the husband “to file a further summons or Notice of Application for Ancillary Relief seeking variation of maintenance and/or to be discharged or released from his previous undertakings as appropriate”.  It seems the husband had not filed anything subsequent to the order dated 30 August 2021.  On 20 September 2021, no further order was given in respect of Form 8, save and except, inter alia, an order that the hearing of examination was ordered to proceed on 8 December 2021.

4.  During the examination, as I can see from the transcript[1], HHJ Melloy was expecting the wife and the husband to proceed with both the variation of maintenance and committal proceedings in the future.  After the examination hearing, the wife then took out a summons for committal on 20 April 2022 in which the substantive hearing for committal is fixed to be heard on 16 December 2022.  In other words, as at the hearing before me, the husband’s Form 8 was left in abeyance.

5.  In opposing this application, the husband filed his Statement of Means (Form 1) on 16 August 2021; an order to the income source to verify the contents of Statement of Means was made on 16 December 2021; and finally, the Statement of Verification by the income source had come on 29 July 2022. The hearing of AIO was first heard before me on 11 October 2022, I granted a short adjournment to 13 October 2022 for the parties to make clarification and to give some room for them to negotiate.  The husband proposed only to accept HK$15,000 out of his salary to be attached.  The wife refused to settle.  To avoid further hearings, I so ordered the application to be disposed on paper.

The law

6.  The power to order an attachment to income is premised on section 28(1) of the MPPO, which reads,

“Section 28(1) of MPPO provides that:-

Where a maintenance order has been made against a maintenance payer and-

(a) (i) a court is satisfied that the payer has without reasonable excuse failed to make any payment which he is required to make by the maintenance order; or

(ii) a court is satisfied that there are reasonable grounds to believe that the payer will not make full and punctual payment in compliance with the maintenance order; or

(iii) the payer and designated payee agree to the making of an order under this section; and

(b) there is any income capable of being attached payable to the payer,

the court may, in accordance with rules made for the purpose of subsection (6), order the income to be attached as to the whole or part of the amount payable under the maintenance order and the amount attached to be paid to the specified payee.”

7.  Section 28(1A) of MPPO provides that,

“For the purpose of subsection (1)(a)(ii), in deciding whether there are reasonable grounds to believe that the maintenance payer will not make full and punctual payment in compliance with the maintenance order, the court shall take into account all the circumstances of the case, including (but not limited to)-

(a) the payer's past record and conduct in discharging his reasonable financial obligation towards the designated payee before any maintenance order is made;

(b) the payer's past record and conduct in connection with the making of maintenance payments to the payee pursuant to the maintenance order or an undertaking in any proceedings; and

(c) the risk of the payer dissipating his property.

8.  Section 28(3B) of the MPPO provides that,

“An attachment order may be made by the court on its own motion or on the application by the maintenance payer or the designated payee or both.”

Further, Rule 13 of the Attachment of Income Rules, Cap 13A provides:-

The court may-

(a) dispense with or relax any procedure specified in rules 3 to 8; or

(b) abridge any time limit specified in rules 3 to 8,

if the court is satisfied that it is fair and reasonable to do so in the circumstances of the case.”

9.  In a Court of Appeal case, CWYJ v. LTYE (CACV 481 of 2020, [2020] HKCA 913), Hon Cheung JA confirmed the decision to make an order of income attachment in the Family Court, the relevant paragraphs appeared as:

“9.26 The Respondent had proposed that he would provide an undertaking that he would not oppose any attachment of income application by the Petitioner in Singapore, subject to provision of his reasonable living expenses. It is common ground that a Hong Kong Family Court order can be enforced against the Respondent in Singapore.

9.27 Judge M Lam held that there was no concrete proposal or figures suggested by the Respondent, further in view of the payment history and the past conduct of the Respondent it is understandable that the Petitioner would be cautious about any such general suggestion and be loath to be burdened with additional costs of commencing another set of proceedings in Singapore. She further held that her invitation for the Respondent to materialise the terms of the attachment of income suggestion and to explore feasible solutions as direct payments from his employer met with no success. It is difficult to see how the Petitioner would be able to design a feasible plan with the limited information disclosed by the Respondent and his past conduct in departing from his undertakings.

9.28 We disagreed with the Respondent’s submission that the judge was wrong to reject his offer on income attachment.  Additional costs to be incurred by the Petitioner in applying for the income attachment order is obviously a relevant consideration, particularly when it is intended to be enforced overseas.  In our view, instead of requiring the Petitioner to pursue this remedy, the initiative should come from the Respondent himself, for example, by direct periodical payment of a realistic amount from his bank account to the Petitioner.  As the matter now stands the Respondent had only started to pay $5,000 each month to the Petitioner since September 2020.  At this rate, as the Petitioner submitted, it will take 66 years to repay the balance of the lump sum of $3,989,647.95 ($4 million less the recent payment of $10,352.05).”

10.  In short, in exercising the discretion to order an income attachment order, the Court will canvass the proposal from the maintenance payer in light of the manner of settlement of arrears of maintenance (or ongoing maintenance), the content of which shall be considered with the payment history and past conduct of the maintenance payer.  The Court also expects the maintenance payer to take initiative to remedy his or her breach.  If the Court found the offer or proposal of the maintenance payer is unrealistic and when the designated payee is unable to design a feasible plan, the Court is entitled to reject the offer of the maintenance payer.

Discussion

11.  The issue is whether the Court shall exercise discretion to order an attachment of income order against the husband.

12.  The wife stated the husband had been unemployed since May 2017, he was able to adhere to the terms of the 2018 consent order until March 2019.  In between, the husband was able to secure a job in the equity field, unfortunately it had ended on May 2022.  The last child maintenance paid to the wife was on 29 May 2019, subsequent to this, the payment of the child’s education costs was also stopped in June 2019.

13.  The wife says the attachment of income order is crucial given the husband has a history of irregular and inadequate payment.  She says that the husband did not pay her as ordered in the 2018 consent order notwithstanding he has commenced with an employment as a managing director with a Hong Kong company, trading in equity, from 1 June 2021, which is two years since the default of the payment.  Not only this, the husband has defaulted paying the wife the agreed GBP34,390 by saying most of the funds obtained from the realization of the trust funds was applied to the legal costs of the matrimonial proceedings.

14.  On the other hand, the husband admitted he was staying with his new wife in Cambodia prior to his commencement of his new job in June 2021. With a view to obtain a gainful employment, the husband had retuned in town. The husband filed his updated Form E on 16 August 2021 in that he had made clear of his current income with the equity company, being some USD14,000 was comprised of (i) net income of USD4,166.67 & (ii) pre-paid commission of USD10,000. Should he had failed to generate sufficient profit or business gets traction, the company will seek repayment of the commission.  This saying is well supported by his employment contract of which I accept this is the true.  The husband has been working with the same company and was being paid at a sum around USD14,000.  The employer’s tax return for the financial year 2021 – 2022 recorded an income of HK$1,097,616. At the hearing on 13 October 2022, he confirmed no request was made by the company to repay the pre-paid commission but this arrangement will be subjected to review on a monthly basis.

15.  The Court is coupled with a discretionary power to grant an income attachment order on whole or part of the amount payable under the maintenance order.  In deciding whether to exercise such power, the Court has to satisfy, (i) the husband has without reasonable excuse failed to make any payment which he is required to make by the 2018 consent order; or (ii) there are reasonable grounds to believe that the husband will not make full and punctual payment in compliance with the 2018 consent order thereafter.  For the purpose of limb (ii), the Court shall take into account all circumstance of the case, the husband’s past record and conduct in both discharging his reasonable financial obligation towards the wife before the 2018 consent order is made; and in connection with the making of payments to the wife.  Apart from that, the Court shall also see if there is risk of dissipation of assets.

Whether the husband has without reasonable excuse failed to make any payment with he is required to make by the consent order?

16.  When the wife set out a case on non-compliance of the 2018 consent order, the husband attempted to say he has reasonable excuse to have failed to make payments.  The husband was well prepared with his variation of maintenance by filing an updated Form E on 16 August 2021 together with an affirmation to explain his financial position.

17.  The husband explained in detail in his affidavit filed on 29 July 2021 that he had no further ability to fulfil the 2018 consent order.

18.  The husband was unemployed at time of the 2018 consent order, he has made his best endeavour to secure an employment since then but only HK$300,000 plus a small commission was earned.  The husband explained in his affidavit filed on 27 August 2021 that he has spent 16 months in Cambodia with his new wife because he could not have afforded an accommodation in Hong Kong.  He was unable to bring the variation application earlier because he was locked down in Cambodia with no laptops and no records.

19.  The husband further explained, since commencing his new job in June 2021, he was paid USD4,166.67 per month together with a pre-paid commission of USD10,000.  To sustain his license as a stockbroker and to avoid turning into a bankrupt, he had deployed his 1^st two months’ salary, approximately HK$50,000, to repay his debts to the bank, loan company and credit card so as to avoid turning into a bankrupt.

20.  The husband’s explanation is not accepted. Although the husband has yet to proceed with his variation of maintenance application, it does not serve as a reason to stifle the wife’s AIO order.  The husband could have revived the said application at any time and that the AIO order can be varied accordingly.

Are there reasonable grounds to believe that the husband will not make full and punctual payment in compliance with the consent order?

21.  The answer is yes. The husband has applied to vary the terms of the 2018 consent order on ground of financial difficulty.  It is expected full and punctual payment is implausible.

Is there risk of dissipating assets on the part of the husband?

22.  The answer is yes, the issue in question is his monthly income.

The husband’s proposal

23.  Notwithstanding the above, the husband conceded to the AIO application on condition that only HK$15,000 be attached.  The wife refused to accept.

24.  In YY v. CHOA (FCMC 7598 of 2010), the designated payee applied for the same order where HHJ Melloy accepted the maintenance payer’s valid concern of triggering his employer’s attention and will affect his job security.  The maintenance payer offered an undertaking to set a direct debit authorization to enable maintenance to be paid from his savings account to the designated payee’s account.  Of course, in this case, the husband agreed to pay maintenance in full as opposed to the husband whom have offered a substantially lower sum of maintenance to be paid every month.  I see the reason why the wife was unable to concede the husband’s proposal and I agree the sum offered is on the low side.

25.  The husband explained, it is part of the employment contract that he has to return the commission to his employer when insufficient profit was generated.  As at the date of hearing, nothing was put into action.  The husband is still having more than HK$100,000 monthly salary.  In this regard, I share same view with the wife that the husband’s proposal to attach HK$15,000 against his income is unrealistic, no feasible plan has been suggested. The husband’s proposal shall be declined and an income attachment order is justified.  I therefore exercise my discretion to make an order that the maintenance and those other items shall be secured by an IAO.

What amount to be attached?

26.  The next step is to assess a reasonable sum to be attached to the order. The husband stated in his Form 1 with his monthly expenditures. I agree with the wife that his expenditures have somehow prevaricated the compliance of the 2018 consent order by prioritizing other spending other than making prompt maintenance payments to the wife, for instance, monthly spending on food HK$11,000; grooming, meal out, entertainment and holiday at a sum of HK$11,000 and keeping a private club membership of HK$2,250. I find the husband’s monthly expenditures are excessive.

27.  The wife has submitted her draft order which contained in paragraphs (1) to (3) with the amount to be attached. I accept they are reasonable.

Costs

28.  In respect of paragraph 4, regarding costs of the wife’s summons, she is seeking HK$298,259 as her costs on indemnity basis against the husband. When costs order being discretionary, I do not agree the costs of the wife’s application shall be made order on an indemnity basis for reason that the husband’s conduct, although in defaulting of paying maintenance pursuant to the 2018 consent order, his conduct may not be as serious as scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive or in an oppressive manner. To save parties’ costs on taxation, I shall embark on summary assessment on costs, up to 13 October 2022 (the 2^nd hearing of the AIO), including all reserved cost of the wife’s summons, as follows[2]:

(i)	Part B: manual work	HK$ 5,950
(ii)	Part C: communications	HK$ 71,204
(iii)	Part D: Professional work:	HK$114,117.85
(iv)	Part E: Counsel:	HK$ 20,500
(v)	Part F: disbursement:	HK$1,114
		HK212,885.85

Orders

29.  With reasons of the foregoing, I grant an attachment of income order as per the draft order submitted by the wife on 27 October 2022 with her written submissions save and except for amendment of such terms appeared hereinbelow:

…

“(1) The sums of GBP4,838.92 and GBP4,700 (or USD/HKD equivalent on the date of transfer) being interest as referred to in rule(3)(2)(f)(iii) of the Attachment of Income Order Rules (Cap 13 sub. leg. A) to be paid on 31 December 2022 and 31 January 2023.

(2) The sum of GBP4,000 per month (or USD/HKD equivalent on the date of transfer) for 38 consecutive months and a final payment of GBP3,094 (or USD/HKD equivalent on the date of transfer) in respect of arrears of payments under the maintenance order first mentioned to be paid from 28 February 2023.

(3) The sum of GBP500 per month (or USD/HKD equivalent on the date of transfer) in respect of current payments under the maintenance order first mentioned to be paid from 28 February 2023.

(4) The sum of HK$4,000 per month for 53 consecutive months and a final payment of HK885.85 in respect of costs in connection with the wife’s summons filed on 27 July 2021 including all costs reserved to be paid from 31 March 2023.

……

This Order shall be effective for the period from 31 December 2022 until further order.”