CWH v. CSMS

FCMC 1810 / 2014

[2018] HKFC 123

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1810 OF 2014

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J U D G M E N T
(Variation of Lump Sum Instalments)

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Introduction

1.  This is an application taken out by the Petitioner Husband (“H”) on 7 December 2017 for variation of a Consent Order dated 28 July 2014 (“Consent Order”) following the Respondent’s Wife (“W”) Judgment Summons issued on 28 September 2017 on H’s failure to pay instalments under the Consent Order since April 2016.

2.  The Consent Order provides, inter alia, for H to pay W a lump sum of $1,440,000 by way of 8 equal instalments of $180,000 each bi-yearly on 1 April and 1 October each year.  The last instalment was agreed to be paid on 1 April 2018, which is a month prior to this trial.  Having paid 3 instalments totalling $540,000, H started to default from the instalment due on 1 April 2016 and the subsequent instalments.  Thus, under the terms of the Consent Order, the total outstanding amount is $1,440,000 - $540,000 = $900,000 which should have been fully paid up as at the date of this trial had there been no default by H.

3.  Due to H’s variation application and in line with the practice, W’s Judgment Summons was adjourned sine die with liberty to restore pending disposal of this application (see C (formerly known as C) v. H[1]).

4.  Prior to commencement of this trial, H made an Open Proposal of settling the balance of $900,000 by paying W the sum of $480,000 inclusive of interests within 14 days with no Order as to costs.  This was rejected by W with no counter proposals.

5.  Both parties are represented by Counsel at this trial.  For H’s variation application, W filed her 2^nd Affirmation[2] in opposition.  W had also raised Questionnaire on H’s Form E which H answered.  W through her Counsel confirmed to this Court that W elected not to give oral evidence at the trial.  Having been so informed of W’s position, H’s Counsel however had not asked for W to be cross examined on her Affirmation nor had his instructing solicitors filed any notice under Order 38 rule 2(3) of the Rules of High Court to cross examine W.  Thus, the trial was proceeded along only with H’s Affirmation evidence and his oral testimonies of which cross examination was conducted by W’s Counsel. 

6.  There is not much dispute between Counsel as to the applicable law and legal principles on variation of maintenance orders, such as the provision of Section 11(7) of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) and those cardinal cases of AEM v. VFM [3] and HCTT v. TYYC[4].   

7.  Before going to the merits of H’s application, it is useful to set out the background of the case.

Background

8.  The parties were married in December 2009.  This is a short and ‘childless’ marriage.  H filed his petition for divorce based on the fact of 1-year separation on 18 February 2014. Decree Nisi was granted on 28 July 2014 which was then made absolute on 23 September 2014.

9.  Both parties were legally represented at the time when the divorce proceedings were commenced.  There is a document by the name “Minute of Agreed Order” dated 6 February 2014 signed by the parties’ respective then lawyers which was filed on the same day when the divorce petition was issued.  The contents of such Minute of Agreed Order had also been set forth in H’s divorce petition to be the financial orders sought by H which was then granted as the Consent Order on the date when the Decree Nisi was pronounced.

10.  There is no issue that the Minute of Agreed Order and thus the Consent Order is a full and final settlement of the parties’ respective ancillary reliefs on a clean break basis. At the preamble of the Minute of Agreed Order, both parties acknowledged and confirmed that they are aware of their respective legal rights as to disclosure, discovery, and their respective financial position and also rights under the MPPO.  Thus, both parties upon legal advice agreed to dispense with disclosure and discovery of documents or otherwise as to their respective incomes and assets.

H’s application for variation

11.  H in his Summons sought for the agreed lump sum of HK$1,440,000 set forth in the Consent Order in respect of which there was the balance sum of HK$900,000 be varied to nil or such sum to be adjudged by this Court.  H in his Counsel’s Opening Submissions and, indeed proposed openly at this trial, a reduction of the outstanding balance sum from HK$900,000 to HK$468,000.  H’s proposed amount of HK$468,000 was worked out by reference to various events which had happened after the Consent Order allegedly leading to a reduction of his income and deterioration of finances[5].

12.  H was and is an investment banker by occupation.  Between October 2006 and March 2016, he was employed by a leading investment bank X.  His last position with X was Executive Director in Asia Pacific Sales & Marketing Department earning an annual salary of HK$2,640,000 plus incentive awards and allotment of Restricted Stock Units (“RSU”)[6]. For the fiscal year 2014/15, his taxable income was HK$4,911,584[7].  H was laid off by Employer X on 31/3/2016.  For the final computation of taxable income for 2015/16, it was HK$2,719,979[8] with a tax repayable to H at HK$34,267 out of the provisional tax that he had already paid in the last fiscal year 2014/15[9].

13.  Whilst still under employment with X and in 2013, H incorporated 2 companies, namely, IGL and AL for running the business of a Japanese restaurant.  IGL was the holding company of its subsidiary AL.  When IGL was incorporated, W was also a shareholder whose interest was taken up by H around late 2013 when their marital relationship turned sour.  Since then, H became the sole owner and proprietor of both companies.  It is H’s case that the Japanese restaurant business was running at a loss since its commencement and eventually ceased business on 30 November 2016.  Over the years, he had kept injecting moneys from his salary and compensation income received from X, as well as savings over the years, into the running of the Japanese restaurant hoping to salvage the business.  For the year ended 2015 and 2016, the reported financial loss for AL was HK$1,377,993 and HK$2,543,274 respectively.  For the parent company IGL, the reported financial losses for these years were HK$1,397,098 and HK$2,562,579[10].

14.  Having lost his employment with X for about 11 months, H was only able to find employment with Y on 1/3/2017 as Head of Hong Kong Sales in Global Treasury Department [Rank – Vice President 2] for a fixed monthly salary of HK$150,000 plus 1 month year end salary as annual fixed bonus[11]. Thus, H’s average monthly income was HK$162,500.  H testified that with his expertise and experience in the investment bank industry, it is not uncommon to take several months or even up to a year to secure similar positions within the field as there would be extensive and in-depth background and credit check before any offer of employment would be given.  For the 11-month of unemployment between 1/4/2016 and 28/2/2017, H spent his time with the running of his Japanese restaurant which turned out to be a failed business venture. Although this was his first time of running a restaurant business, he reckoned that it was more risky and competitive for working in the investment bank that running a business himself.

15.  In January 2014, H entered into an Agreement to purchase a property in London, UK for the price of GBP 442,800 which by that time was to be constructed from and between 1 July 2015 to and including 31 December 2015[12].  The purchase was made with mortgage facilities from UOB Bank and the amount outstanding as at H’s updated Form E was around HK$2,680,000.  This was and still is an investment property then yielding a rental income of GBP 1,820 a month, which roughly was around HK$19,023 a month (exchange rate of GBP 1 : HK$10.45).  The monthly mortgage instalments were around GBP 1,175.16 and GBP 1,208.52[13].

16.  Around October 2014, H disposed of his Audi A5 vehicle for HK$250,000 and purchased a brand new Maserati car “Model GhiBli S” for the price of HK$1,330,158[14].  There were also options purchased for the Maserati car at HK$70,115.  This Maserati car was purchased under the name of his company AL[15] as the registered owner through hire purchase for HK$1,250,000 with OCBC Wing Hang Bank repayable by 60 instalments at the monthly rate of HK$22,813[16].  H admitted during cross examination that the Maserati car was purchased for his pleasure.

17.  In July 2016, H re-married his present wife who is unemployed.   There is a child born out of this marriage in August 2016.  H and his new family lives in 3 bedroom rented unit (together with car park) in Bel-Air, Cyberport under a renewed 1-year lease at the monthly rental of HK$57,000 since March 2017[17].  

18.  There are 3 reasons upon which H relied to be a change of his financial circumstances for bringing the present application for variation.  They are :-

(a)  Loss of employment with X for some 11 months with no income received (“Loss of Employment Reason”);

(b)  The failure of his investment in the Japanese restaurant business (“Failed Investment Reason”); and

(c)  The financial burden arising from his re-marriage in 2016 and the need to support a child (“Remarriage Reason”)

19.  H in his Form E deposed to the following general and personal expenses :-

“4.1 General

Item	Amount
Rent	57,000.00
Mortgage instalments
Utilities (electricity, gas, rates, telephone & water)	2,000.00
Management fees
Food	10,000.00
Household expenses	5,000.00
Car expenses	25,000.00
Insurance premia
Domestic helper(s)	5,500.00
Other (specify) Loan repayment	36,547.00
Total monthly household expenses	HK$141,047.00

 4.2 Personal

Item	Amount
Meals out of home	5,000.00
Transport	3,000.00
Clothing / Shoes
Personal grooming (including haircut and cosmetics)	3,000.00
Entertainment / presents
Holiday
Medical / Dental
Tax	25,000.00
Insurance premia	7,878.49
Interim maintenance
Contribution to parents
Dependent family members
Other (specify)
Total monthly personal expenses	HK$43,878.49

20.  Thus, the total monthly expenses are about HK$184,925.49.

21.  For details of the insurance premia of HK$7,848.49 per month, H in his Affirmation[18] sets out as follows :-

Policy	Annual Payment	Monthly Payment Amount
AIA Policy B3xxx03772	USD 4,469.27 = HKD 34,918.85	HK$ 2,909.90
AIA Policy B3xxx21531	USD 2,287 = HKD 17,868.56	HK$ 1,489.05
AIA Policy B3xxx57461	USD 4,738 = HKD 37,018.47	HK$ 3,084.87
AIA Policy B3xxx57458		HK$  394.67
Total: HK$7,878.49

The Law

22.  The jurisdiction of the Court in applications for variation of maintenance order is under section 11 of the MPPO which provides :

“(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section, the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.

(2) This section applies to the following orders, that is to say –

(a) any order under section 3;

(b) any order made by virtue of section 4(1)(a) or (b) or 4(2)(b);

(c) any order made by virtue of section 5(2)(a) or (b) or 5(4);

(d) any order made by virtue of section 6(1)(b), (c), (d) or € on or after granting a decree of judicial separation;

(da) any order made by virtue of section 6A; and

(e) any order made by virtue of section 8(5), 8(6)(a), (b), (d) or

(e) or 8(7)(b).

………

(3)  ..……..

(4)  ……….

(5)  ……….

(6)  ……….

(7)  In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of the matters to which the court was required to have regard when making the order to which the application relates……..”

23.  The approach of the Court has been summarised in the leading case of AEM v. VFM (Variation of Maintenance)[19]:

“The power to vary a periodical payment order was expressly provided for by s.11(1) of the MPPO. The modern approach as required by s.11(7) was for the Court to have regard to all of the circumstances of the case. It was not required to proceed from the starting point of the original order but to look at the matter afresh. An increase in the wealth of the Husband was a relevant factor to be taken into account. At the same time the basis and effect of the original order were relevant factors to which the court on variation should pay regard and there should not be a radical departure from the approach taken by the parties themselves when they had entered into an agreement embodied in a consent order”

24.  In considering whether there is a change of circumstances, the court may look at the case de novo.  In other words, the court is not fettered by the existence of a previous order.  Thus, the court may look at the overall situation afresh and make an order based on the parties’ existing financial circumstances and needs. The court has a broad discretion in applications relating to variation.[20]  In so doing, the court should also bear in mind that an application to vary the terms of a settlement embodied in a consent order are not to be lightly entertained unless the party seeking to disturb the same can show good and substantial cause.[21] In the case of L v. C[22] where Stock JA said :

“The courts must be astute in this field to guard against the manipulative litigant who seeks to undo an agreement…… and to bear in mind the factors, quite clear now as a result of developed authority, which might go to vitiate such agreement……”

25.  In the case of HCTT v. TYYC[23], Mr. Justice Lam (as he then was) agreed with the judgment Hon Tang VP (as he then was) in the case, citing L v. C and said :

“43. I hasten to add that the courts in the family jurisdiction must be equally astute to guard against unmeritorious applications for variation by litigants who have second thoughts about settlements they have knowingly reached on their own volition.

…………

45. Further, in many instances, one or both parties are acting in person. Lack of legal representation should not be regarded as a vitiating factor in an ordinary sense.

46. Therefore it would go against the modern ethos of family dispute management if the court were to entertain lightly an application to vary the terms of a settlement embodied in a consent order.

47. I think the following approach suggested by Stock JA at para 42 of L v. C [2007] 3HKLRD 819 at p.841, with slight modifications, can equally serve as a good guidance for deciding whether an application for variation of periodical payments in a consent order should be entertained, “an agreement [on periodical payments] is ‘presumptively [not to be varied without material change of circumstances]’, the burden being on the party seeking to achieve a different [terms] to show good and substantial cause why the compact should not be respected, and ….. the scope for so doing is one directed at an injustice in the circumstances in which the agreement came to be concluded or in clear injustice occasioned to one of the parties by reason of event unforeseen at the time of the agreement were the agreement to be enforced to its letter."

26.  As for lump sum, it is trite law that the Court’s power to order a lump sum can only be exercised once (see de Lasala v. de Lasala).[24] Further, the Courts have jurisdiction to vary orders made by consent.  Section 11 does not impose any restrictions on variation of consent orders (see G v. G).[25]  However, the jurisdiction to vary lump sum order payable by instalments must be exercised with caution. 

27.  In the case of Tilley v. Tilley[26] where the wife successfully applied for variation to waive one of the instalments of a lump sum under a consent order payable to the husband on the basis that she could not pay the husband without selling the home where she and the children were then living, Ormrod LJ had said :

“……it was very undesirable to create the impression that orders for lump sum payments by instalments could be readily, or were likely to be easily, varied on change of circumstances. Parliament had given the court full jurisdiction to do it but it was to be borne in mind that people relied on these things being carried out. It should be plainly borne in mind that the husband had a continuing obligation to the children which offset the consent order and, had there not been that continuing liability for these children, and had the execution of this agreement not inevitably been going to lead to the dispossession of the children from their home, the result of the case might have been very different. That was the right approach of the court in this case.”

28.  In the English Court of Appeal case of Westbury v. Sampson[27], Bodley J at paragraph 58 of the Judgment said :

“The re-opening under s 31 of the overall quantum of lump sum orders by instalments, especially when made as part of a package intended to be final (and all the more so when ordered by consent following an agreement) should only be countenanced when the anticipated circumstances have changed very significantly, and/or for cogent reasons rendering it quite unjust or impracticable to hold the payer to the overall quantum of the order originally made.”

29.  In the Hong Kong case of CH v. MEH[28], the Court of Appeal where Cheung JA at paragraphs 26 of the Judgment said as follows :-

“(2)……The underlying principle that supports this view is the public policy of finality in litigation, so that orders, and especially consent orders, providing for a clean break, are not set aside unless there is a compelling reason to do so…...

(3) In order to give effect to this principle, the Barder v. Caluori approach requires a new event to strike at the heart of the order so as to invalidate the basis, or the fundamental assumption, upon which it was made. Similarly under the application for variation route, the anticipated circumstances must have changed very significantly or when it is unjust or impracticable to hold to the original order.

(5)…...The lump sum order, although payable by instalments, was an order made once and for all. Obviously that was the foundation upon which the parties had chosen to regulate their financial positions. As observed by the authorities, the fortuitous circumstances of allowing the payer to pay the lump sum by instalments should not widen his opportunity to reopen the quantum issue.”

30.  With these authorities in mind, I will now consider H’s application.

The Reasons relied upon by H

31.  As H did not call upon W’s evidence to be tested nor raised as an issue about W’s finances at this trial, H’s application would thus be considered upon his own case that there was a material change of circumstances after the Consent Order which warranted the variation. H relied upon the 3 reasons set forth in paragraph 18 of this Judgment.

Discussion

(a)  Loss of Employment Reason

32.  On H’s own case, his employment with Employer X ended on 31 March 2016 and then stay unemployed for some 11 months until 1 March 2017 when he was re-employed by Y.  This variation application was, however, filed some 20 months after the employment with X had ended and 9 months after he had been re-employed by Y.  The Summons was dated 7 December 2017.      

33.  The explanation provided for the delay was that H had not had the benefit of legal advice of his right to seek variation.  I do not believe this is true.  Given his background as an Executive Director in a leading investment bank X for 10 years and an undergraduate of McMaster University in Ontario, Canada, even though he did not know his legal rights to come to Court to seek variation, it is unbelievable that he would not contact W for his inability to pay but only came to know about his rights after being summoned to Court by W’s Judgment Summons.  In my view, H’s attitude over his liability to pay under the instalments under Consent Order is nothing but, say, “catch me if you can !”.

34.  In any event, he is not allowed to rely on a reason which had become, which I would describe as “historic” through passage of time to try and support his present application for variation, which should have been taken whilst he was unemployed.  To accept such “historic” reason for supporting a variation application taken out 20 months later is, in my view, wrong in law and in principle. 

35.  The fact that he obtained employment with Y but at a lower income could only be a change of financial circumstances provided that he made the variation application soon after or within a reasonable time since employment by Y in March 2017.  The fact that he did not do so for 9 months and only asked for variation when being summoned to Court by W for the past dues was found to be plausible excuse rather than legitimate reason.

36.  Before I move on to H’s other reasons, it is worth to mention that there is no evidence of H had ever contacted W about his inability to pay the remaining instalments or past dues whether after he had lost his employment with X, during the 11-month unemployment or after his employment with Y.  At the risk of repeating myself, even though he honestly did not know he could seek variation from the Court, it is my view that any such contact is only a matter of course for a party who is unable to pay instalments requiring no legal knowledge or advice to do so.  Lack of such contact supports my finding that H’s loss of employment with X, unemployment or subsequent employment with Y but for lower income could not be said to be genuine and legitimate reasons of change of financial circumstances to support his variation at this moment.       

37.  H’s first reason fails completely.

(b)  Failed Investment Reason

38.  It is H’s own case that his investment in the Japanese restaurant business never yielded any profit since commencement around 2013.  He had been trying hard to further inject his income from Employer X and his savings accumulated over the years hoping to salvage the losing out business which had eventually failed.

39.  At the time when the Consent Order was granted on 28 July 2014, the investment had already started and was in a state of continuing deficit.  Although H would not be able to foresee or predict his business turnover after the Consent Order, the continual losses could be said to be a distinct possibility rather than a change of financial circumstances.  Had the situation been that the business was making some level of profit or break even when the Consent Order was granted but somehow met with downturn in profit making afterwards, it could be said to be a change in financial circumstances.  However, this is not the case here.

40.  It is worth mentioning that H, being the 100% sole owner of the companies IGL and AL running the business of the Japanese restaurant, could easily manoeuvre the profit or loss status of the companies by having his own personal expenses borne by and debited as companies’ expenditure.  An example would be his purchase of the brand new Maserati car for HK$1.3 million plus options around HK$70,115 was under the name of AL.  It can be seen from the books and accounts of AL that the costs for such purchase as well as all the related day-to-day running costs were debited as expenses of AL.  Having said, the reason for H to close down AL in December 2016 but chose to keep on with his IGL even up to this trial became obvious.

41.  Therefore, H’s such reason also fails.

(c)  Remarriage Reason

42.  It is trite law that re-marriage of a person against whom an order for periodical payments had been made does not terminate the order or diminish his or her liability under the order.  In the case of N v. C[29] where His Honour Judge Bruno Chan had said :-

“39.  It is well established in law that remarriage by a person against whom an order for periodical payments has been made does not terminate the order or of itself entitle that parties to a reduction in the amount ordered, and as regard the position of the after-taken wife, she must, on general principle, be presumed to take the other spouse subject to all existing encumbrances, whether known or not, including an obligation to support the wife or child of a former dissolved marriage, as per Hodson LJ in Cockburn v Cockburn [1957] 1 WLR 1020, CA when he said : -

“The law being as it is, it is quite impossible for the courts to ignore the just claims of the first wife because the man has taken on himself other obligations, although the courts have to take into account these obligations, as involving a reduction in the capacity of the man to pay for the upkeep of his first wife and child”.

40.  So in the case of Cowie v Cowie (1983) 13 Fam Law 250 where the husband had remarried, had a child and obtained increased mortgage, but his former wife was still able to obtain increase in periodical payments.  On appeal by the husband it was held that he had increased his obligations with his eyes open; and in Moon v Moon (1980) 1 FLR 115 where the husband has remarried and his second wife was pregnant, it was held that he must cut his coat according to his responsibilities to his first family.”

43.  Although in the N v. C case the learned Judge was referring to periodical payments order, I can hardly see any difference between periodical payments order and lump sum order payable by instalments, especially when the order was made by consent.  As said in CH v. MEH (supra), lump sum by instalments is the foundation upon which the parties had chosen to regulate their financial positions.  In my view, it is even harder for the payer, through the backdoor of ‘remarriage’, to seek to vary the instalments under the lump sum order since this would defy the finality nature of lump sum, which could only be ordered once and for all (see de La Lasala v. de Lasala[30]). It could only be varied if and only if (my emphasis) there are change of circumstances which strike at the heart of the lump sum order so as to invalidate the basis, or fundamental assumption, upon which it was made (see CH v. MEH (supra)) or that it would be manifestly unjust to the paying party not to vary it.

44.  Moreover, in Jackson’s Matrimonial Finance, (9^th Edn) at paragraph 3.113 it was said :-

“3.113 Remarriage means that the payer spouse has assumed new financial burdens and responsibilities, and pro tanto his means decrease; prima facie there is a decrease in the available resources out of which he can made provision for his former spouse and family; but, bearing in mind this consideration the court will try to give the former spouse and children such orders as will protect their standard of living: it is ‘bearing in mind this consideration’, not ‘subject to it’”

45.  On H’s mere fact of having been remarried and also with a baby girl, I do not find it sufficient to invalid the basis upon which the Consent Order was made.  Otherwise, divorced spouses could easily reneged from

whatever agreement on maintenance (lump sum or otherwise) that they had agreed with their former spouse by getting himself or herself remarried, in some cases he or she may even be in urgent need of the decree absolute for the remarriage, thus leaving their former spouse and probably with children in a state of unexpected financial crisis.  This should not be the rationale behind the law on variation of lump sum by instalment order.  

46.  Hence, H’s remarriage reason also fails.

H’s assets and liabiltiies

47.  Even though H had not called for W’s financial needs to be considered de novo in his variation application, I have some observations on H’s assets and liabilities. 

48.  As at the date of Form E in December 2017, H has had 2 outstanding loans with Dah Sing Bank.  The 1^st loan was for HK$1,000,000 of which 28 instalments of HK$17,767 each month had been paid (“1^st Loan”).  The amount outstanding was HK$568,544[31].  The 2^nd loan was for HK$840,000 of which 4 instalments of HK$18,880 each month had been paid (“2^nd Loan”).  The amount outstanding was HK$811,840[32]. Each month H has to repay HK$36,647 for the 1^st and 2nd Loans to Dah Sing Bank.

49.  H also obtained a loan from China Construction Bank for HK$600,000 on 12 October 2015 repayable by 36 instalments of HK$17,747 a month[33]. As at the date of the Form E, around 26 instalments had been paid (“3^rd Loan”).  

50.  By counting the number of instalments that had been paid, it appears that the 1^st Loan was created around August 2015 whereas the 2^nd Loan was created in July 2017.  Thus, within the 3 months between August and October 2015, H had obtained the 1^st Loan from Dah Sing Bank and the 3^rd Loan from China Construction Bank in the total sum of HK$1,600,000.  Whilst H’s evidence was that he had been injecting sums of money into his Japanese restaurant business over the years from his income with Employer X and personal savings, as well as a personal loan from his brother for HK$1,300,000, there is no documentary evidence that these loans were actually advanced for such purpose or had actually been spent on the business venture.  As W’s Counsel rightly submitted, which I agreed, that H did have the ability to arrange payment of the instalments whenever they were due to W but had rather chosen not to do so.

51.  H’s other liabilities are the car loan with OCBC Wing Hang Bank, mortgage loan with UOB Bank for his investment property in London, UK and a personal loan from his brother for HK$1,300,000.  At the time of his Form E, the amount outstanding for the car loan was HK$485,464 whereas UK mortgage loan outstanding was around HK$2,680,000.

52.  In my view, the car loan was a liability of AL rather than H personally.  Nonetheless, H had included in Part 4.1 of his Form E an item of “car expenses” of HK$25,000 to be borne by him.  This is wrong both in the accounting and legal perspective.  This is a liability under the books and accounts of the limited company AL rather than a general expenses item of H.  Most importantly, the car apparently was for H’s (and probably his new family) use and enjoyment of which should not be accounted for as a financial burden entitling H to seek to reduce the agreed instalments provided to W.

53.  The mortgage loan with UOB Bank was incurred prior to the Consent Order.  This was H’s personal liability which would be gradually reduced through payment of mortgage instalments.  It should not be overlooked that such loan had actually enabled H to be able to acquire landed property as an investment to receive rental income, not to say the possibility of earning any capital gain in land value.  This should not be considered as a liability affecting H’s ability to pay W so that he could seek reduction of W’s instalments under the agreed lump sum.  H’s evidence of his attempt to sell the property but without success was not backed up with any evidence.  This was only his bare allegation which I do not believe to be true.

54.  For the personal loan of HK$1,300,000 owed to his brother, as I said earlier, there was no documentary evidence that such personal loan had ever existed for the asserted purpose.  I do not believe in H.

55.  As to the financial loss of IGL to the extent of HK$2,562,579[34], there was no evidence that H was required to repay IGL or that any legal proceedings had been taken against him for repayment.  Given the fact that H was and is 100% owner of IGL, such debts so recorded could not be considered as liability affecting H’s means to pay W the instalments agreed to be paid under the Consent Order.

56.  Now I will turn to H’s assets.

57.  In H’s Form E, he disclosed having 2 savings account with HSBC with credit balance of HK$192,000 and HK$13,500 respectively.  Besides, he also has an account with UOB with a credit balance of HK$39,780.  There was a savings account with Dah Sing Bank with a credit balance of HK$172,612.43.  All these accounts total credit balance was HK$417,892.51, which is sufficient to pay off 3 instalments of past due to W.

58.  H’s landed property in London, UK worth around HK$5,400,000 with an unpaid mortgage of around only half of it, that is, HK$2,680,000.  Thus, H has a net equity of around HK$2,720,000 on hand.

59.  H was the owner of 6 insurance policies, 4 of which in US currency and the remainder 2 in Hong Kong currency[35]. Amongst these policies, there was a policy with the baby girl as person insured purchased recently on 20 June 2017 for an annual premium of US$4,469.27. Whilst there are no legal restrictions against H purchasing such insurance out of his fatherly love, it does offend any sense of fairness for H to be able to do so at the expense of reducing W’s lump sum maintenance.

H’s standard of living, monthly costs and expenses

60.  H and his new family lives in a 3 bedroom rented property for HK$57,000 a month on a 1 year fixed term tenancy commencing 20 March 2017[36]. The monthly rental was said to remain the same as at this trial and this is the 3^rd leasing contract of the property.

61.  Although H claimed his present wife is unemployed as a housewife, there was an item of domestic helper of HK$5,500 per month with no explanation as to why his present wife could not do the household chores.  Moreover, such amount is also in excess of the statutory requirement of wages for foreign domestic helper.  The item of car expenses, registration and parking of HK$25,000 a month should not be included as part of his expenses for the fact that it should be borne out of the revenues of AL.  The sum of HK$36,547 for repayment of loan could be accounted for as expenses affected his ability to pay W provided that the loan obtained had been legitimately used.  H’s evidence that the loan was used for investing in his Japanese restaurant was not supported by any cogent documentary evidence but his bare allegation.  Accordingly, I do not give credit to such sum of HK$36,547 to be H’s necessary expenses when come to consider his variation application.

62.  H’s monthly income at trial was HK$162,500.  His total monthly expenses in his Form E was HK$184,925.49.  In my calculation, with the said unjustifiable sums of HK$25,000, HK$5,500 and HK$36,547 removed, his net monthly justifiable expenses would then become HK$117,878.49.  If one is to take away also the premium for the newly purchased insurance for the baby girl of US$4,469.27 a year, which is US$372.44 or around HK$2,905 a month, H’s justifiable monthly expenses would be further down to HK$114,973.49 (that is, HK$117,878.49 – HK$2,905).  With H’s monthly income of HK$162,500, H would be left with a surplus of HK$47,526.51 a month (that is, HK$162,500 – HK$114,973.49).

63.  During cross examination in the afternoon of the day of trial, H admitted that he had sold a property in Hong Kong in August 2016 for around HK$6,100,000 and received net proceeds of around HK$1,500,000. This was the time after his default of the April 2016 instalment due to W. When further asked about why not paying W with such net proceeds, H’s answer was that he was expecting the new born baby and the proceeds were partly for reserve for the baby and partly to subsidize his loss in the restaurant business.  In my view, such reply is a pack of excuses for his wilful default over the outstanding instalments repugnant to any sense of justice and is unacceptable.

64.  Given careful consideration, I find H was and is in a financially sound situation with no material change of financial circumstances so much so that to qualify him to seek variation of W’s lump sum instalments.  

65.  I wish to add that even in a case where resources are limited (which is not the case here nor is my findings on H), if H wants to fulfil his obligations towards his new family members and express any fatherly love to his baby by way of money spending, what he should have done is to sacrifice his own needs but not at the expense of reducing W’s instalments.  

Conclusion

66.  For all the reasons aforesaid, I find H’s application unmeritorious and must be dismissed.

67.  As to the question of costs, there are no exceptional circumstances which I can consider to depart from the normal rule on costs. I will accordingly order H to pay to W the costs of his Summons dated 7 December 2017, including all costs reserved, to be taxed if not agreed.

68.  I also grant Certificate for Counsel.

69.  This is a costs order nisi which will become absolute unless any party applies to vary the same within 14 days from the date of this Judgment.

Judgment Summons/Enforcement

70.  Since W’s Judgment Summons was adjourned pending determination of H’s variation application which I had now decided, I grant leave to W to restore her Judgment Summons for a hearing to be fixed before the Listing Officer. 

71.  However, had W been desirous of commencing other modes of enforcement as opposed to restoring her Judgment Summons which should be considered as a last resort for enforcement, I also grant leave under Section 12 of the MPPO for enforcement of those part of the unpaid sums which by now must have been overdue for over 12 months.