H v. H

cacv 209/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 209 of 2006

(on appeal from FCDJ NO. 10877 of 1997)

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J U D G M E N T

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Hon Le Pichon JA:

1.  This is an appeal by the petitioner who is the wife from the order of Deputy Judge Chan dated 27 April 2006 granting the application of the respondent husband that the maintenance ordered by Deputy Judge Levy on 10 September 2001 (“the Levy order”) be reduced. At the conclusion of the appeal hearing judgment was reserved which we now give.

Background

2.  The parties were married on 31 December 1989.  The divorce took place in 1998.  A decree nisi was granted at the end of March 1998 and custody of the two children of the marriage was granted to the petitioner.  The daughter is now almost 16 and the son will be turning 12 in December.  Both are studying at the ESF school in Shatin.

3.  It is unnecessary, for the purposes of this appeal, to set out the several orders made since the decree nisi.  Suffice it to say that a striking feature of the various orders made since the divorce relating to maintenance is that a distinction has been made throughout between the maintenance of the children to which the respondent has to contribute and which amount has been varied both upwards or downwards and school fees, medical and dental expenses which have been his sole responsibility.

4.  Under the Levy order, the respondent was ordered to pay the petitioner the sum of $23,500 per month.  In addition, the children’s school fees as well as their medical and dental expenses were to be borne exclusively by the respondent who, under his employment contract with the Mass Transit Railway Corporation is entitled to medical cover for his children as well as an education allowance although reimbursement of school fees is capped at 83% for each child.  Whilst the respondent’s application to the judge below related to both maintenance and access, the present appeal only concerns maintenance.  For convenience, that part of the order will hereafter be referred to as “the Chan order”. 

The proceedings below

5.  As noted above, the respondent applied to vary downwards the amount of maintenance payable under Levy order.  In his supporting affirmation, the respondent relied on two matters: an increase in his marginal tax rate as well as having to make a higher contribution to the daughter’s school fees upon her moving from primary to secondary school and additional tax payable on this benefit. 

6.  Before the judge, the application was put on three grounds as appears from paragraph 23 of the judgment:

“(1) Some of the expenses of the children are no longer in existence or being unreasonable in nature and therefore should be cut to a more reasonable level;

(2) With the present level of maintenance payment, the Husband [Respondent] is not in a position to save up sufficient funds for his retirement; and

(3) In comparison, the Wife [Petitioner] is in a much better financial position and so her contribution to the children should be increased so as to lessen the Husband’s [Respondent’s] burden.”

7.  It would appear that the improved financial circumstances of the petitioner since the date of the Levy order was a material consideration in the proceedings below although that aspect did not feature in the respondent’s supporting affirmation.  It is clear that the petitioner’s earnings had changed dramatically since the date of the Levy order.  At the time of the Levy order, she was earning $39,660.  By the time of the Chan order, her earnings had risen to $79,330.  The petitioner appeared to take exception to what she considered to be a ‘departure’ from the stated grounds for variation.  In my view, that is misguided.  The deficiencies in the respondent’s supporting affirmation may be explained by the fact that the respondent was then (as now) acting in person.  Moreover, since there was undisputed evidence as to the change in the petitioner’s earnings, it would have been wrong had the judge not taken that factor into account.

8.  At the hearing below, the petitioner was legally represented but not the respondent.  After hearing the evidence, the judge made findings of fact which may be summarized as follows:

	Petitioner	Respondent
Average monthly income	79,338	84,537
Monthly household expenses	34,221	13,730
Monthly personal expenses	27,507	27,782
Monthly children’s expenses (excluding maintenance under the Levy order)	13,574	6,956
Other assets	2,513,872	1,752,243

9.  Of the petitioner’s general household expenses, the judge considered it fair to attribute one half of that sum (i.e. $17,110) as expenses of the children.  He therefore came to the figure of $30,684 as the petitioner’s total expenditure on the children each month.  To that he added the respondent’s expenditure on the children of $6,956 per month and reached an aggregate figure of $37,640.  It is to be noted that the sum of $6,956 included school fees (excluding reimbursed school fees) of $2,141 and medical/dental expenses of $760 per month.

10.  The variation application was heard by the judge in March 2006.  There was then already some uncertainty regarding the petitioner’s employment situation.  Since 2002 the petitioner has been and remains an environmental protection officer for one of the subcontractors working on the KCRC Lok Ma Chau project.  Her contract was due to expire on 31 July 2006.  There was evidence from her employer at the hearing below that, subject to KCRC’s agreement, the contract would be extended to 31 October 2006 but that any further extension was unlikely as the project would be completed by year end 2006.  Whilst the judge was alive to the possibility of the petitioner losing her employment by October 2006, he considered that not too much weight could be given to that factor in the application before him because the loss of her employment was at least 6 months away and was not a certainty.  In any event, it would be open to her to apply for a further variation of the maintenance order should that eventuality occur.

11.  The judge concluded that the maintenance order should be varied downwards.  His reasons appear at paragraph 54 of the judgment:

“54. I am of the view that it would be fair for the Husband [Respondent] to bear a higher percentage, say at 60%, of the children’s total expenses, despite the fact that the present overall financial well being of the parties are more or less equal.  I come to this conclusion after taking into account of all the above considerations, and in particular the following facts:

(1) The Husband [Respondent] is 4 years younger than the Wife [Petitioner];

(2) The Husband [Respondent] has a more secured employment (and also a better prospect because of the intended merger of the MTRC and KCRC) than the Wife [Petitioner];

(3) The Husband [Respondent] has re-married with his present spouse having some level of earning power (about $25,000 per month) while the Wife [Petitioner] is still single and having the sole custody of the 2 children; and

(4) In terms of salary and fringe benefits, the Husband [Respondent] does have a higher monthly income than the Wife [Petitioner].”

Based on the judge’s finding of an aggregate expenditure on the children by both parents of $37,640, 60% of that would be $22,584.  As $6,956 was already being borne by the respondent, he calculated that the respondent’s net monthly contribution towards the petitioner’s expenses on the children, rounded up, should be $16,000 as from 1 May 2006.

This appeal

12.  Neither of the parties was legally represented in this court.

13.  As a preliminary matter, the petitioner was asked to update the court as to her employment situation.  She produced an e-mail dated 20 October 2006 from her employer which read as follows:

“As the work has substantially been completed, it would be difficult to extend your contract by two months to end of December 2006.  I would like to confirm your extension to end of November for your successfully completion of your duties.

I wish you would accept the extension and contribution to successfully completion of the contract.”

14.  In addition to that e-mail, the petitioner also produced several letters relating to recent job applications.  The long and short of the present situation is that her current employment will almost certainly come to an end by the end of November.  This is a crucial new development since the hearing below. 

15.  Given her predicament on the employment front and the fact that the level of the petitioner’s earnings was a major factor which led to the downward variation in the amount of maintenance payable by the respondent, the appeal must be allowed. In my view, unless and until the employment situation stabilises for the petitioner, the Levy order must continue to take effect at least from 1 November 2006.

16.  This development however does not dispose of the present appeal because there would be the question of whether the Chan order should nonetheless take effect for the several months from May to October 2006.  I will first deal with the petitioner’s application to adduce new evidence.

Application to adduce new evidence relating to medical expenses

17.  The petitioner made an application to adduce new evidence relating to medical expenses incurred by the respondent.  As noted above, the respondent’s monthly expenses for the children (excluding the maintenance payment) of $6,956 included a sum amounting to $760 in respect of medical/dental expenses.  In the court below, the petitioner’s solicitor cross-examined the respondent about that item of expenditure.  The new evidence sought to be adduced by the petitioner was said to show that the answers given by the respondent were untrue.

18.  At the hearing, the application was refused.  The petitioner was legally represented below.  That expenditure was never challenged in her Form E.  Nor were further and better particulars sought.  In those circumstances, it would be wrong to introduce new evidence on that matter in this court.

Challenges to the Chan order

19.  I now turn to consider the other points taken by the petitioner.

(A) the petitioner’s general household expenses

20.  The expenses as listed in the petitioner’s financial statement (which the judge accepted and set out in paragraph 28 of the judgment) comprised the following items:

General

(1) Rent	$17,000
(2) Utilities	$ 1,122
(3) Food	$ 3,500
(4) Household Expenses	$ 2,864
(5) Car Expenses	$ 3,980
(6) Domestic Helper	$ 5,600
(7) Internet	$  155
	-----------
Sub-total:	$34,221

The petitioner submitted that she had given oral evidence at the hearing and had updated the figures for items (2) and (6) to $1,800 and $6,000 respectively and that the judge had erred in not adopting those figures.

21.  As to the utility expenses, the petitioner’s evidence appears from the following passage of the transcript:

“ A. Should be more than Mr Hanks’.  He put down 1,500.  Well, the way I put down the figure here was I input every receipt into the computer Excel file, okay?  And then over one year, September 2004 until August 2005, and then deducted and then I divided by 12 of the total amount and then I put down this number here.

  Q. All right, but are there some months when you’ve had more than 1,122 in utilities?

  A. I would think so.

  Q. What’s the highest you’ve had?

  A. I would think for the utilities, 1,800 may be reasonable.”

Given the question that was put to the petitioner, her answer was, at best, ambiguous.  There was no evidence that she had made a mistake or that $1,800 was the average amount.  Rather, given the amount claimed by the respondent ($1,500) whose accommodation is apparently smaller, she felt that her utility costs must be more.  But whatever it is, it must based on fact which the $1,800 figure is not.  Accordingly, that particular challenge must fail. 

22.  As to the cost of the domestic helper, her evidence was as follows:

“Q. … And your domestic helper, you’ve put down a figure for $5,600.  Is that the salary you actually pay her?

A. Well, she got $3,670 from me.  I did not reduce her salary to 3,000-something.

Q. So you give her that and then you pay the levy.

A. And then I pay her insurance.  I pay her medical.  I pay her return trip to Philippines and her holiday.  When she’s on holiday, I need to find someone to replace her.  So all those and divide by 12.

Q. All right.  That’s the figure you came up, 5,600.

A. Yes, and also I need to pay the 400.

Q. You have to pay the $400 a month, the levy.

A. The tax is around 3-400 tax.  Yes, the government tax, yes.

Q. Yes.  Is that included in this figure?

A. Probably not.

Q. Probably not.

A. Yes.”

Again, her evidence was unsatisfactory.  It was certainly less than categorical.  I do not consider that the judge could be criticised for taking the $5,600 figure as being inclusive of the levy.  So, on this point, the challenge must also fail.

(B) apportionment of the petitioner’s general household expenses

23.  The judge then apportioned those expenses 50:50 between the petitioner and children.  The question which arises is whether it was reasonable for the judge so to do.  The petitioner’s household consists of herself, the two children and the domestic helper.  The domestic helper is a necessary adjunct of the household in order to enable the petitioner to take up employment.  The children are no longer young children: the daughter is a teenager and the son is now in secondary school.  In many respects, their needs in terms of household expenses are little different from those of an adult.  To attribute only one half of the general household expenses as the children’s expenses is not a fair or reasonable division.  Nor does it reflect reality.  In my view, a division of 67:33 as being the children’s expenses and the petitioner’s expenses respectively is called for and warranted.

(C) errors in the judge's findings of the petitioner’s expenses for the children

24.  The petitioner’s complaint was that it was unfair for the judge to have accepted the respondent’s updated figures given at the hearing but not the petitioner’s.  It was said that he merely adopted the expenses set out in her financial statement made some months earlier.  The complaint related to three items only, viz. items (1) (8) and (11).  The differences, in tabulated form, are as follows:

	As per petitioner’s financial statements	As per judgment below	Updated amount
(1)    Extra tuition fees	3,871	3,871	4,171
(8)    Lunches and pocket money	1,390	1,390	1,710
(11)  Camp/school trip/PTA	1,119	600	939

25.  The respondent accepted and took no issue with the figure of $1,710 as the petitioner’s expenditure for item (8).  As to item (1), exhibit P2 which was before the judge does indeed substantiate the petitioner’s figure.  The judge’s reasons for reducing item (11) which was for camp/school trip/PTA reflected the respondent’s successful challenge to the cost of a one-off trip by the daughter to Malaysia in 2005 of $7,950.  The judge therefore reduced the sum claimed in the financial statement to $600.  The updated claim for item (11) is in fact lower than that stated in the financial statement.  The items for camp/school trip/PTA in exhibit P2 are the following:

YMCA camp/school camp	662.5
summer camp	157
school camp	61
total	880.5

In her oral submissions, the petitioner also referred to a sum of $58 for the daughter which would have brought the amount to $939 but other than her assertion at the hearing, I can find no evidence of that amount in the papers.  I would also add that only selected excerpts from the transcript were included in the bundles.  That aside, the amount of $662.5 per month translates into $7,950 per annum which is exactly the amount of the Malaysian trip that the judge had disallowed.

26.  The trip to Malaysia was not a private jaunt taken by the daughter.  It was a school trip organised by the school which is very much part of the overall education it provides for its students.  If a child is allowed to attend a particular school, attendance at these camps or school trips is nothing out of the ordinary and even to be expected.  To be left out of school trips may have an undesirable effect on the child.  For these reasons, I would interfere with the decision of the judge and allow the cost of those school trips.  I would therefore substitute the rounded up figure of $881 in lieu of the $600 allowed by the judge.  Accordingly, the revised amount of the petitioner’s expenses for the children is (13,574 + 300 + 320 + 281) $14,475.

(D) school fees, medical and dental expenses

27.  As noted above, prior to the Chan order, school fees and all medical and dental expenses had been the respondent’s sole responsibility.  That is the theme that runs through all the earlier orders even when the court has varied the amount of maintenance payable by the respondent either upwards or downwards.  The judge’s order had the effect of requiring the petitioner to bear 40% of the unreimbursable part of the school fees, the annual premium payable by the respondent under his company’s medical scheme and any shortfall or unreimbursable medical and dental expenses for the children.  The judge did not give any reasons for departing from that practice.  For my part, I do not consider it right to depart from the policy that had been applied from inception, there being no special circumstances that warrant it.  I would therefore adjust the respondent’s expenses for his children by disallowing the items for school fees and medical/dental expenses of $2,141 and $760 respectively.  Accordingly, the readjusted amount of the respondent’s expenses for his children is $4,055.

Conclusion

28.  The revised general household expenses of the petitioner attributable to the children are (67% of $34,221) $22,928.  The petitioner’s children’s expenses and the respondent’s children’s expenses as revised are $14,475 and $4,055 respectively.  Accordingly, the aggregate expenses incurred by both parents come to $41,458.

29.  The amount of contribution (at 60%) payable by the respondent is $24,875.  After allowing for the $4,055 the respondent is already paying for the children, his net contribution for the months of May to October 2006 (inclusive) is $20,820.  I would round that up to $21,000.

30.  Accordingly, the appeal is allowed and the order below set aside save for the period from May to October (inclusive) 2006 during which period the order below will take effect subject to the following variation: the sum of $21,000 is to be substituted for the sum of $16,000.  The shortfall of $5,000 per month for the period of 6 months (May to October) is to be paid to the petitioner within 21 days of this order.

31.  As the parties were not legally represented, I think it would be appropriate to order that there be no order as to costs.  There is therefore to be an order nisi to that effect.

Hon Sakhrani J:

32.  I agree.

Hon Le Pichon JA:

33.  Accordingly, there is to be an order in terms of paragraphs 30and 31 above.