BKSH nee KSH v. JAB

HCMP 767/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 767 OF 2017

(ON AN INTENDED APPEAL FROM FCMC NO. 5366 OF 2008)

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D E C I S I O N

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Hon Cheung JA (giving Decision of the Court) :

I．Application

1.  Two applications brought by the respondent husband (‘husband’) were before H H Judge C K Chan.  The first is an application to enforce the sale of a house in England (‘the House’) jointly owned by him and the petitioner wife (‘wife’) which the parties had agreed by a consent order to sell and for leave to enforce the order in England.  The second is an application to vary the part of the consent order relating to the maintenance of their two children.  The Judge gave directions for the sale of the House but refused the husband’s application to enforce the sale in England.  The Judge varied some parts of the consent order on maintenance.  The husband was not satisfied.  He applied for leave to appeal.  The Judge refused leave.  The husband now renews the application before this Court.  We will deal with it on paper.

II.  Background facts

2.1  The wife and the husband married in 1994.  The wife petitioned for divorce in 2008. The decree absolute of divorce was granted on 26 February 2010 dissolving the marriage.  There are two boys born within the marriage, respectively in 1995 and 1998.  In the divorce proceedings, the older boy was referred to as ‘B’ and the younger boy as ‘J’.

2.2   In 2009, for the purpose of resolving the custody of B and J, the parties appeared before the Judge on 19 November 2009.  At the hearing, the parties reached an agreement that they should have joint custody of B and J with care and control to the wife and reasonable access to the husband.  On the same day, the parties also reached a settlement on their respective claims for ancillary relief.  Based on the parties’ agreement, the Judge made a consent order in the following terms :

‘ 1. The [House] be sold at the best available market price or at a price to be mutually agreed and at a time to be agreed upon the granting of Decree Absolute.

2. After the deduction of all reasonable outgoings and expenses, including (but not limited to) any taxes to be paid, agent fees and legal fees, etc., a further sum of HK$3,000,000 be deducted and put into a joint bank account, out of which the school or university tuition fees of the 2 children will be paid (“the educational fund”).  In the event that the HK$3,000,000 fund is not exhausted at the completion of the children’s full time education, the balance in this fund shall be divided up between the parties in equal shares.

3. The Respondent shall pay a monthly maintenance of HK$30,000 (HK$15,000 for each child) as the children’s maintenance on the 1st day of every month as from 1 December 2009 until the sale of the [House] and the actual receipt of the sale proceeds and the establishment of the educational fund as mentioned in paragraph 2 above and thereafter the maintenance payable by the Respondent be increased to HK$34,000 per month (HK$17,000 for each child).

4. Upon the sale of the [House] and after the deduction of the reasonable outgoings and expenses and the educational fund, the balance of the sale proceeds be divided between the parties in equal shares and the Respondent will pay a further sum of US$186,851 to the Petitioner from his own share.

5. If the [House] cannot be sold by 30 June 2010, as from 1 July 2010, the Respondent shall continue to pay the HK$30,000 per month as maintenance for both children (HK$15,000 each) until the actual sale of the house and the receipt of the sale proceeds, but the Respondent has to pay back a lump sum representing the difference between the monthly sum of HK$41,000 and HK$30,000 as calculated from 1 July 2010 from his share of the proceeds of the sale of the [House].

6. The payment of the children’s maintenance will last until the children attain the age of 18 or finish their full time education whichever is the later.

7. The above agreement is in full and final settlement of the parties’ respective claim for Ancillary Relief, except for the maintenance of the children.

8. There be liberty to apply for the carrying out of this order.

9. No order as to costs, including all costs reserved.’

(‘1^st AR Order’)

2.3  As the sale of the House did not materialize, the parties went back to the Judge for further order and direction.  On 9 August 2010, the Judge based on the agreement of the parties, made a further consent order in the following terms :

‘ 1. The [House] be sold as soon as possible at a price not less than £2.35 million or at such price as the parties may otherwise agree;

 2. In the event that the Respondent is unable to pay any or the whole sum of HK$30,000.00 per month as maintenance for the two children of the family as from 1^st September 2010, all such arrears of maintenance shall be paid out from the Respondent’s share of the sale proceeds of the Property upon its distribution;

 3. On the sale of the [House], there be an account of total sum of money due from the Respondent to the Petitioner to cover the following:-

(a) the sum of US$186,851.00 as stated in paragraph 4 of the Court Order dated 19 November 2009;

(b) the sum of money representing the total difference between HK$41,000 per month and HK$30,000 per month as stated in paragraph 5 of the Court Order dated 19 November 2009;

(c) the sum of the arrears of maintenance as stated in paragraph 2 of this Order;

(d) the sum of all outgoings and expenses paid for by the parties on the Property to be agreed by the parties; and

(e) any other sum of money to be agreed by the parties, if any.

   4.  The Solicitors or the agent representing the parties in the sale of the [House] shall deduct from the Respondent’s share of the sale proceeds the total sums of the money due to the Petitioner as stated in paragraph 3 of this Order and pay the same to the Petitioner on distribution of the sale proceeds;

   5.  There is no order as to costs.’

(‘2^nd AR Order’)

2.4  In about 2014, the parties left Hong Kong and relocated to England.

2.5  On 7 March 2016, the husband issued the two applications mentioned in paragraph 1.  

2.6  By that time, B and J were studying at university in England.  The wife alone resided in the House.  The husband had retired and had remarried with two dependent children.  The husband claimed that, due to those changes of circumstances, he was unable to provide maintenance to B and J and therefore, he asked the Court to relieve him from paying the maintenance and to set aside the HK$3 million education fund.  The husband also complained that the wife had been uncooperative in the sale of the House and as a result the House was still not sold.  The wife opposed the husband’s application for variation of the maintenance and denied being obstructive in the sale of the House.  A hearing was held on 1 and 2 September 2016 before the Judge to resolve the disputes.  Both parties were unrepresented at the hearing. They made submissions and gave evidence.  The husband called another witness.

2.7  The Judge having heard the parties’ arguments and the evidence, made, among other things, the following rulings :

1)  Sale of the House

2.8  The House shall be sold by private treaty at or above the reserved price of £2,350,000 within six months of the order.  If the House cannot be sold by private treaty within six months, such sale shall be effected by public auction with a reserved price of £1,500,000 within four months thereafter (i.e. by 30 September 2017).  The Judge, however, held that there is no legal basis for granting leave to enforce a Hong Kong court order in England.  The husband’s application for leave to enforce the sale order in England was refused.

2)  Maintenance of B and J

2.9  For the outstanding maintenance of B and J until the sale of the House (from 1 December 2009 to 30 September 2017 at HK$30,000 per month), the total amount is HK$2,820,000.  Credit is given for HK$470,000 (being the round down of half of the sum of HK$942,581.50 representing school fees paid by the husband), leaving a balance of HK$2,350,000 due from the husband.

2.10  As from 1 October 2017, the maintenance of B and J is increased to HK$34,000 per month.  The husband shall continue to provide maintenance to B and J until their completion of the present university degrees on 31 August 2019 and 31 August 2020 respectively in a lump sum of HK$1,020,000.

2.11  A sum of HK$946,000 being the monthly difference between HK$41,000 and HK$30,000 for the period from 1 July 2010 to 30 September 2017 is payable by the husband.

2.12  All the above sums together with the sum of US$186,851 (clause 4 of the 1^st AR Order) shall be deducted from the husband’s share of the net sale proceeds of the House and paid over to the wife.

3)  Education fund

2.13  In lieu of establishing an education fund under the 1^st and 2^nd AR Orders, the husband shall pay a lump sum of £35,000 being half share of B and J’s university tuition fees for the period from 1 October 2017 to 31 August 2020.  The said sum shall also be deducted from the husband’s share of the net sale proceeds of the House and paid over to the wife.

III.  Grounds of Appeal

3   In his ‘Grounds of Appeal’ dated 6 January 2017 and ‘Further Grounds of Appeal’ dated 16 January 2017, the husband set out various grounds of appeal.  Those grounds have all been argued before the Judge and rejected.  In essence they can be summarised as follows :  

1)  Lack of jurisdiction and enforcement: The wife and the husband are now resident outside Hong Kong in England.  The Judge did not have jurisdiction to hear the application for variation of maintenance and his judgment of 14 October 2016 is not enforceable in England.  The Judge has erred in refusing his request for adjournment of the hearing to allow him to apply for legal aid representation on the jurisdictional issue.

2)  Recusal of Financial Dispute Resolution (‘FDR’) judge: An FDR judge cannot hear application for variation of maintenance.  The Judge has fallen into error in allowing himself to hear the application for variation of the 1^st and 2^nd AR Orders notwithstanding that he had conducted the FDR in 2009 and 2010.

3)  Wrongful exercise of discretion: The Judge failed to consider or give due weight to the changes of circumstances, such as the husband has retired with no income, he has remarried with two dependent children, and the needs of the two dependent children.  These changes justify termination or downward variation of the maintenance payable to B and J. 

4)  Wrongful calculation of maintenance: The Judge has made mathematical errors in calculating the amount of maintenance in arrear and the amount of future maintenance payable by the husband.

IV.  Principle for granting leave

4.  Section 63A of the District Court Ordinance (Cap. 336) stipulates that leave to appeal shall not be granted unless the Court is satisfied that the appeal has a reasonable prospect of success; or there is some other reason in the interests of justice that the appeal should be heard.

V.  Our views

Ground (1) : Lack of jurisdiction and enforcement of Hong Kong court order  

5.1  There is no merit on this ground.

5.2  The husband did not and cannot dispute that Hong Kong Family Court had jurisdiction over the parties in their divorce and ancillary relief proceedings.  It follows that all applications for variation of the 1^st and 2^nd AR Orders must come within the jurisdiction of and must be made to Hong Kong Family Court.

5.3  It is a matter of English law whether and how a Hong Kong Court judgment can be enforced in England.  The husband has not produced any expert evidence to the effect that the English Courts will not recognize and enforce the Judge’s order of 14 October 2016.

5.4  The husband only applied to adjourn the hearing for the purpose of applying for legal aid after evidence was heard before the Judge when he should have applied for legal aid before that.  The Judge did not err in principle nor in his exercise of discretion to refuse the adjournment. 

Ground (2) : Recusal of FDR judge

5.5  This ground of appeal is unarguable.

5.6  The principle is that the Judge who has conducted an unsuccessful FDR hearing cannot have further involvement with the application for ancillary relief (see: Practice Direction 15.11 paragraphs 1 and 8; AB aka ABW v MAW, unreported CACV 147/2016).  The stark fact is that the husband did not object to the Judge hearing the variation application when the case was heard.  Bearing also in mind that six to seven years had elapsed since the FDR hearings, we are of the view that, in the circumstances, it is too late to raise this point on appeal with a view to unravelling the proceedings and start afresh.

Ground (3) : Wrongful exercise of discretion

5.7  Varying a maintenance order is a matter within the discretion of the Judge.  An appellate court will not entertain an appeal from an order which was within the discretion of the Judge to make, unless it can be shown that the Judge exercised his discretion under a mistake of law or in disregard of principle or under a misapprehension as to the facts; or that he took into account irrelevant matters or failed to exercise his discretion or the conclusion which the Judge reached in the exercise of his discretion was outside the generous ambit within which a reasonable disagreement is possible and not merely the appellate court would prefer a solution which the Judge had not chosen (see: Hong Kong Civil Procedure 2017, Vol 1, paragraph 59/0/54).

5.8  The husband complains that the Judge failed to take into account the changes in circumstances such as his reduced income, the needs of his two younger children from his second marriage and the living costs in England.  

5.9  For the reasons given by the Judge for refusing leave to appeal (paragraphs 36 to 38), this point is not reasonably arguable.  We are satisfied that the Judge had applied the correct law and approach and had given due regard to all the relevant circumstances in the exercise of discretion in dealing with the maintenance of the children.  There is no room for the appellate court’s intervention.  

Ground (4) : Wrong calculation

5.10  The husband complains that the Judge made mistakes in calculating the amount of maintenance in arrear, the amount of future maintenance payable, and the amounts to be deducted from the overdue maintenance.  

5.11  We are of the view that leave to appeal should be granted on the following three matters :

1)  Deduction of rent.  It is apparent from the transcript of the hearing that the wife had conceded that she would not claim for rent.  The Judge had not reduced this from the arrears of maintenance.

2)  J’s two year secondary education expenses.  If, according to the husband, the children’s education in England is free until 18, then it is reasonably arguable that this should be deducted from the arrears of maintenance.

3)  Deduction of the whole of $942,581.50 being school fees paid by the husband.  The Judge only allowed half of this sum to be deducted.  It is reasonably arguable that, until the education fund is established of which the parties will each be responsible for half of it, credit should be given to the husband for the whole of the education expenses that he had paid.  After all he paid them all by himself and the wife had conceded that the monthly sum of $11,000 (being the difference of $41,000 and $30,000) included education expenses.

VI.  Procedural irregularity and other matters

6.  In his affidavit dated 21 April 2017 and his submission of 22 June 2017 the husband advanced further grounds on his appeal.  He claimed that he was precluded by the Judge from referring to affidavit evidence when he gave evidence at the hearing in September 2016 and he was further precluded from making a submission at the conclusion of the evidence.  We have reviewed the transcript of the hearing below, we do not consider it is reasonably arguable that the husband was deprived of the opportunity of presenting his case fully.  These other grounds are also not reasonably arguable.

VII.  Conclusion

7.1  The husband is granted leave to appeal limited to the three matters set out in paragraph 5.11.

7.2  We will make an order that the costs of this application be in the cause of the appeal to be brought by the husband.