LBO v. WWKF

FCMC11924 /2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 11924 OF 2005

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JUDGMENT
(Variation of maintenance,
leave to enforce arrears and judgment summons)

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Introduction

1.  There are several applications before me that now require adjudication. In the first instance the wife issued a judgment summons dated the 20 November 2013 seeking to enforce outstanding maintenance payments for the two children of the family plus payment of their educational costs in the total sum of HK$556,638.40 on the premise that the arrears only went back one year. The husband subsequently issued a Notice of Application dated the 14 February 2014 seeking to vary the children’s maintenance downwards. He asks to be discharged from all his previous maintenance obligations. On the 17 February 2014 the wife issued a further inter partes summons seeking leave to enforce arrears of maintenance that had accrued more than 12 months previously. Although there is some confusion over the figures, according to the wife’s 4th affirmation dated the 20 January 2015, filed immediately before the adjourned hearing she is seeking the following:

9.   In summary, the arrears of maintenance plus education expenses have accrued to HK$3,201,222 as of December 2014, being the total of (i) arrears of maintenance plus 50% of tuition fees amounting to HK$3,051,472 and (ii) arrears of 50% of extracurricular activities expenses amounting to HK$149,750.

2.  Rather late in the day and as set out in counsel’s closing submissions, she also seeks interest and a surcharge on that sum.

3.  This case concerns the enforcement of maintenance and educational expenses for the two children of the family, who are now aged nearly 21 and 18 years old respectively, where the husband has been retired for a number of years and his earning capacity is allegedly somewhat limited. There are also issues concerning the husband’s other financial resources and the extent to which they should, if proven, have been used to maintain the two girls.  Since the commencement of these proceedings the wife, who was in severe financial difficulty at that time has now recovered her financial stability somewhat, in that one property has been sold and she has secured another job. Consequently she confirmed at the adjourned hearing in January, that she is now in a position to financially support the girls through their undergraduate degrees. She is strongly of the view however that the husband should contribute towards those expenses as he had originally promised to do.

Background

4.  The parties were previously married for just over 12 years and they spent most of their life together in Hong Kong. The wife is American and the husband is Hong Kong Chinese. They are presently aged 54 and nearly 65 years old respectively. As indicated above they have two children, both girls, the eldest of whom is now studying a four year liberal arts programme at a good college in the United States. The younger one is hoping to follow suit and likewise wishes to study a four year liberal arts degree commencing in September of this year.

5.  On the 14 October 2005 the wife issued divorce proceedings based on one year separation with consent. She pleaded that the parties had been separated since April 2004. The proceedings were amicable and a consent summons was entered into which included inter alia an agreement that the husband do pay periodical payments of HK$15,000 per month per child, until each reaches the age of 18 years or ceases full time education whichever is the later. In addition he undertook to pay for half of the children’s educational expenses (including school fees and extracurricular activities) until each had completed their tertiary education. On the 13 April 2006 the decree nisi was pronounced and an order was made in these terms. The parties’ assets were also divided between them in an equitable fashion. The wife then relocated back to the United States with the two girls.  In July 2007 the wife remarried in the United States and in February 2008 the husband remarried in Hong Kong.        

Variation of maintenance

6.  The general rule of thumb is that where a judgment summons has been issued together with an application to vary, then the application to vary should be dealt with first, regardless of which application came first in time. It is often the case that the two applications will be dealt with in two separate hearings. In the event that they are to be dealt with one after the other in the same hearing, then it is incumbent on the court to ensure that it is clear that the application to vary is dealt with first and in chambers and that the judgment summons is dealt with second and in open court. In this instance given the delay between the hearing in August and the adjourned hearing in January, and the fact that the wife was travelling from the United States for those hearings, it was felt that it was more appropriate for the judgment summons to be dealt with after the application to vary. Having canvassed the same with both sides the matter proceeded on that basis by agreement. There was also an application for leave to enforce arrears that were over 12 months old.

The law on variation of maintenance

7.  Both sides have referred to previous cases determined by this court where the law is set out as follows:

Each parties’ respective application to vary is made pursuant to section 11 (7) of the Matrimonial Proceedings and Property Ordinance Cap 192, which provides that:

“(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 ……”

8.  It is accepted that in considering a change of circumstances, I may look at the case de novo. In other words the court is not necessarily fettered by the existence of a previous order. I may look at the situation afresh and make an order based on the parties’ existing financial circumstances. (See Ch 3.131 Jackson’s Matrimonial Finance and Taxation, 7^th edition). It is also true that there would normally be a reason for the application to vary or what some might call a “trigger”.

9.  The parties also have a duty to make full and frank disclosure of their means and a failure in that duty can lead the court to draw an adverse inference. (See Baker v Baker [1995] 2FLR 829).

10.  The court has a very wide power, including a power to terminate payments and to backdate the variation ordered. The overall objective is to achieve a fair outcome (see M v M, FCMC 4070 of 1990, dated 12 May 2006, unreported).

Recent case law

11.  In a recent Court of Appeal decision on variation – WNWG v PBF – [2012] HKCU 675, these basic principles were reiterated. The Hon Lam J said that:

[12]   As regards the approach that the court should adopt in considering an application for variation and the weight to be attached to the original order, Tang V-P said in HCTT v TYYC [2008] 5 HKC 86 at paras 15 to 16:

“15. But as Garner v Garner [1992] 1 FLR 573 shows that does not mean that the earlier order, whether made by consent or not, carries no weight. How much weight should be given to the earlier order must depend on the circumstances. Cazalet J said in the English Court of Appeal:

“Almost invariably, an application to vary an earlier periodical payments order will be brought on the basis that there has been some change in the circumstances since the original order was made, otherwise, except in exceptional circumstances, the application will, in effect, be an appeal. If it was correct when made, then there will usually be no justification for varying it unless there has been a material change in the circumstances. However, because of the impact of continuing inflation, because children grow older and cost more to support and because, for example, the cost of living in its increase may hit one party harder than another, it will usually follow that, if time has passed, there will inevitably have been some changes in the circumstances, and in particular in the financial circumstances, of the parties concerned.

Following Lewis v Lewis, by which decision this court is bound, a court on the hearing of an application to vary is fully entitled to look at all the relevant matters set out in s 25 of the Matrimonial Causes Act 1973 [i.e. s.7 MPPO] .  On occasions, the court may be slow to accede to an application to vary a consent order, not least because the parties’ solicitors might otherwise be deterred from either seeking to negotiate such a provision or to achieve finality.  Another factor which may influence a court will be the time that has passed since the original order was made.  If an application consequent on an order is brought very soon after that order has been made, the court, in normal circumstances, is likely to attach more weight to the earlier order than if it had been made some years previously.  Like-wise, the court would expect to pay full regard to any special terms agreed between the parties at the time the original order was made – as, for example, when endorsements on briefs or contemporaneous correspondence show that an agreed order has, for some particular reason, been set at an artificially low figure.  Shortly stated, the court must decide what weight it should attach to the original order and all the surrounding circumstances.  However, once an application to vary is before it, the court is fully entitled to make an order considering all the circumstances afresh, paying such regard to the old order as may be thought appropriate.”

16.  Thus, although the jurisdiction to vary is untrammeled, normally the earlier order would not be varied unless there has been a material change in circumstances.”

[13] And further at para 37, His Lordship said,

“Justice requires that proper weight should be given to the consent order.”

[14]   Though the emphasis may be slightly different, Cheung JA was of the same view in AEM v VFM [2008] 3 HKLRD 36, at para 14, in particular at sub-paras 6 and 8,

“6. Almost invariably, an application to vary an earlier periodical payment order will be brought on the basis that there has been some changes in the circumstances since the original order was made, for example, continuing inflation, the increased costs in supporting a growing child and that one party may be more adversely affected than another by the increase in the costs of living: Garner v Garner.

8.   At the same time the basis and intended effect of the original order are 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: Boylan v Boylan [1988] 1 FLR 282.”

12.  This then is the appropriate approach to take in an application to vary as here. In this instance the parties entered into a consent summons with the intent that this would govern their financial affairs going forward. In particular provision was made for payment of the girl’s education expenses up to and including their tertiary education. It is clear that it was understood that each party would be responsible for 50% of those costs. 

The issues with respect to the application to vary

1)   What is the earning capacity of each party?

2)   What other financial resources does each party have at their disposal?

3)   How much maintenance should be paid, if any? In the event that the maintenance order is dismissed and the husband’s undertaking discharged, when should that order take effect from?

What is the earning capacity of each party?

13.  The husband’s case is that he does not have an earning capacity of any significance. He explained that he was originally employed in the garment industry. At the time of the divorce he was the Vice President of a company that manufactured denim. The husband earned a good income – HK$80,000 per month plus commissions. He held this position when the parties divorced in 2006. He says that the company shut down its operations in Hong Kong in July 2007 and since then he has found it very difficult if not impossible to find a similar position in Hong Kong. He was employed for short periods of time from July 2007 to October 2008 but earned only HK$20,000 per month. He later secured another job in October 2008 – but that only lasted a month.  Thus the husband effectively retired shortly thereafter, i.e. from about November 2008. His tax demands for the year 2008/09 show that he was not obliged to pay any tax for that year. Notwithstanding that it is common ground that the husband continued paying maintenance until January 2009 and that he paid some maintenance until September of that year. The wife sets this out in her 2^nd affirmation of the 28 August 2013. This was later confirmed by the husband in the witness box. For ease of reference I will set out the table in the wife’s affirmation as follows:

5.   I set out a breakdown of the maintenance payments which I have received from the Respondent since 1st January 2009:

	Dates	Children’s Maintenance
		(HK$)
	January 2009	30,000
	February 2009	20,000
	March 2009	20,000
	April 2009	10,000
	May 2009	10,000
	June 2009	10,000
	July 2009	No children’s maintenance
		received
	August 2009	10,000
	September 2009	10,000
	October to December	No children’s maintenance
	2009	received
	2010 to 2012	No children’s maintenance
		received
	January to June 2013	No children’s maintenance
		received
	TOTAL	120,000

14.  The husband has paid no maintenance since then – i.e. since October 2009 to date.

15.  It is his case that he is largely dependent on his current wife, who supports him financially and pays for all household expenses, holidays etc.  The husband claims to have monthly expenses of just over HK$7,600 per month and he says that he is responsible for his own personal expenses. Notwithstanding that it is clear that he enjoys a comfortable lifestyle.

16.  The wife’s case is basically set out in her third affirmation dated the 12 April 2014 as follows:

13.   Despite numerous requests made by me to the Respondent for the settlement of the outstanding Children’s maintenance and his share of the educational expenses of the Children, the Respondent has failed and / or refused to pay me the same. On each occasion the Respondent maintained that he had not found a job despite the fact that I had introduced the Respondent and referred him to numerous potential employers.  I crave leave to refer to Exhibit LBO-4 annexed to my 2^nd Affirmation which are copies of the email correspondence showing my efforts in referring and introducing the Respondent to various employers in the garment industry, a field in which the Respondent has been practising throughout our marriage.

14.   I am therefore of the impression that the Respondent has deliberately neglected finding employment to avoid paying the Children’s maintenance and his share of the educational expenses of the Children.

17.  In addition she also asked in her Form E Financial Statement dated the 4 December 2012 that:

6.1   I am asking the court to carefully review the intention of the divorce decree, the acceptance of maintaining the girls quality of life and mandarin studies, written email explanation agreeing to meet the parental obligation, review of efforts to find employment, movement of assets such as the sale of Baguio Villa home and current lifestyle that indicates financial means above those stated in the February 2014 E-form.

18.  In so far as the husband’s present earning capacity is concerned - although I have great sympathy for the wife I do not accept having heard the evidence, that it is feasible to expect the husband at now nearly 65 years of age, to earn the same or similar amount of money as when he was at the height of his career. I also note that the manufacturing industry has declined in Hong Kong and that a lot of companies have closed down their operations here and moved elsewhere.  I accept that the husband’s approach must have been very frustrating for the wife – especially when she was making every effort to introduce him to would be employers. It also seems to me that the husband may not have tried very hard to find alternative employment, especially employment outside of Hong Kong.  I do however accept that he has an earning capacity of sorts and one that he must now make every effort to realize. He should also have issued an application to vary the maintenance a lot earlier. I also accept that his position has become worse as time has gone on and that his earning capacity is now probably lower than it would have been back in 2007/8, when these problems first arose. Indeed the wife accepts that it becomes more difficult with age to find employment – but that it is not impossible if you approach it in the right way. I would agree with her. It also seems that the husband has little incentive to find alternative employment as he is being maintained almost entirely by his present wife.    

19.  The wife for her part was involved in executive search and head hunting. She likewise earned a good income when the parties were together and prior to divorce. At the time that she issued the judgment summons however she was in severe financial difficulty. Although she had set up a new company EMLCC, it was not doing well and she was forced to rely on assets to help support both her and the family. I accept that EMLCC did not generate any income in 2013 and accordingly she was not required to submit a tax return. Since then however she has managed to turn things around and all credit should be given to her for that. She started a new job in September 2014 and she was able to sell a property – so providing her with much needed liquidity. Consequently she has put US$400,000 to one side in order to pay for the girl’s tertiary education. It is not clear whether or not that sum will be sufficient.       

20.  Thus on the face of it the wife has an earning capacity in the region of approximately US$11,000 per month inclusive of bonus. Although I am of the view that the husband also has an earning capacity I would also accept that it is somewhat limited. However it seems to me that he should be able to earn in the region of HK$15,000 - HK$18,000 per month – either on a full time or part time basis.  

What other financial resources does each party have at their disposal?

21.  The wife has other financial resources at her disposal including a further property etc. The real question here is whether or not the husband also has other resources at his disposal which he could utilize or could have utilized previously for the girls maintenance and education costs. The wife puts her case on this as follows in her third affirmation:

The Respondent’s ability to pay maintenance and educational expenses

17.   The Respondent has means to pay the Children’s maintenance and educational expenses for reasons as follows.

18.   The Respondent has indicted in various emails exhibited in my 2^nd Affirmation that he was waiting for access to his Monetary Provident Fund retirement fund upon his 60^th birthday in 2010.  He could have utilized the same to pay the Children’s maintenance and educational expenses.

19.   Moreover, the Respondent is in possession of a collection of valuable watches including Cartier, Rolex, Audemars Piguet etc which he could have utilized to pay the Children’s maintenance and educational expenses.

20.   The Respondent purchased a property situated in Flat X,  Baguio Villa, Pokfulam, Hong Kong with his second wife Ms KL (as tenants in common) in 2006 for HK$5.8 million.  He and Ms L subsequently sold the property in 2008 for HK$9.05 million.  Therefore the Respondent could have utilized his 50% share in the net proceeds which he has received from sale of the property to pay the Children’s maintenance and education expenses.  I crave leave to refer to refer to Exhibit LBO-7 annexed to my 2^nd Affirmation which is a copy of the land search record of the Baguio Villa property.

21.   I am also informed by other family members (WF, CF) and friends (ML that the Respondent currently leads a very comfortable or even lavish lifestyle including new cars and frequent 1^st class travel.  I crave leave to refer to refer to Exhibit LBO-8 annexed to my 2^nd Affirmation which are copies of photographs of the Respondent.

22.   Notwithstanding the aforesaid, the Respondent has made no offer to pay his contribution to the educational expenses.  In any event, the Respondent’s failure to comply with the Order to pay the full amount of our Children’s maintenance, as well as half of the Children’s educational expenses including school fees and extra-curricular activities, cannot be justified when he can afford to travel extensively over the past few years.

23.   I have specifically asked the Respondent to provide documentary evidence of the current value of his MPF and his watch collection, and the net sale proceeds of the Baguio Villas property in my solicitors’ letter to him dated 27^th November 2012 as exhibited at LBO-2 annexed to my 2^nd Affirmation which is a copy of the said letter.  However, the Respondent has not provided any of the requested documents to date.

24.   It is obvious that the Respondent has deliberately and wilfully refused to pay the full amount of maintenance and educational expenses for the benefit of the Children since 2009.  The fact that the Respondent has refused to make any financial contribution towards the Children’s maintenance and educational expenses and has left me to draw down on my limited savings, is totally unacceptable.

The husband’s Retirement fund

22.  The husband explains in his affirmation in reply that he withdrew his MPF fund early when he was aged 62 years old and he received just over HK$140,000. I accept what he says in this respect. It is clear that these funds would not, on their own, have provided him with the means to pay for the girl’s maintenance and education costs. However the husband could have offered to make some payment with these funds and it seems to me that in the circumstances it was incumbent upon him to do so.

Valuable watches

23.  I also accept that the husband does not have a valuable watch collection of the magnitude that would likewise assist with the girl’s costs. I accept that he has a Rolex and an Audemars Piguet watch.

The sale of Baguio Villas

24.  The husband owned the flat in Baguio Villas with his current wife as tenants in common. The difficulty is that the husband was not forthcoming about the full facts surrounding the sale of that property, nor did he produce documentary evidence to support what he said until the second tranche of the trial in January 2015. In his affirmation dated the 5 May 2014 he put his case as follows:

(e)   The Property sold in 2008

55.   In paragraph 22 of the Petitioner’s 2^nd Affirmation, the Petitioner states that Ms KL and I, as tenants in common, purchased a flat for HK$5.8 million which was subsequently sold in 2008 for HK$9.05 million (“the Property”).  The Petitioner also produced a copy of the land search in respect of the property in question.

56.   On my calculation, my 50% share of the net profit out of the sale proceed was at most HK$1.625 million.

57.   In fact, my email of “August 3, 2010 9:04:18 AM PDT” in response to the Petitioner’s email of “Tuesday, August 03, 2010 2:20 AM” in which she wrote “I know you bought an apartment but later sold it with a nice profit?” (“LBO-4” and “LBO-5”), I had already explained specifically to the Petitioner that the profit I gained from the same of the Property had been mainly lost in the economic crisis and stock markets by then.

58.   By the time when the Property was sold, I had not defaulted any payment for the Children’s Maintenance and the Educational Expenses, despite I had already been struggling financially as a result of the sharp drop of my income and the eventual loss of employment in November 2008.  Reference is made to paragraphs 14 to 28 above.

25.  This led to the following direction being given at the end of the hearing on the 5 August 2014:

3.   The Respondent do provide documents to show the whereabouts of the sale proceeds of Flat X, Baguio Villas, No 555 Victoria Road, Hong Kong, together with documentary proof showing the deposit of the sale proceeds and to bring the same to court on 21 January 2015;

26.  The husband produced copies of bank statements, which showed that there was a mortgage on the Baguio Villas property of just over HK$2.7 million. It is common ground that the property was sold for HK$9.05 million. Three sums of money were then paid into the husband’s joint bank account with his current wife – HK$905,000 on the 27 May 2008, HK$519,528.42 on the 28 June 2008 and HK$4,800,000 on the 30 June 2008. Thus the net proceeds of sale amounted to some HK$6,224,528.40. Had the parties divided this sum equally between them each would have been entitled to HK$3,112,264.20 cents or say just over HK$3.1 million each. Instead the husband says that because he owed his current wife money, including money that he had borrowed to pay for the girls maintenance (although this is not mentioned in his affirmation) and because they had agreed that he would be responsible for the renovation costs of the new property, which is held in his current wife’s sole name, it was agreed that he would receive only HK$1 million and that the remainder of the funds would be paid to Ms KL. To be frank I did not find the husband at all credible in this regard. His affirmation was misleading, as was his oral evidence. The full picture did not become clear until he produced copies of the bank statements at the adjourned hearing. Even then his explanation was somewhat farfetched.   

27.  So is the husband to be believed? Or was this situation orchestrated, as the wife would have me believe, in order to reduce the assets held in the husband’s name in the event that proceedings for enforcement were issued?

28.  The husband points out that at the time that Baguio Villas was sold that he was paying the maintenance and the education costs even though he was only earning HK$20,000 per month. In his affirmation he says that he relied on his savings in order to be able to do this. Later as I have said, he claimed to have borrowed from his wife for that purpose. Whilst that may be true – it is also clear that the situation was fast becoming untenable. In such circumstances it seems to me that, putting it at its lowest, the husband did not choose to make his daughters his priority when organising his financial affairs with his current wife. It seems to me that it was open to him to insist that he took his 50% share of the net proceeds of sale when the property was sold and that he could then have utilized some of that money for their benefit. He chose not to do so. His current wife must also have been aware of his financial commitments to his daughters. Some provision should have been made for them instead of ensuring that any available cash was transferred to Ms KL.       

29.  I accept in the circumstances that the husband had some funds available from June 2008 onwards to contribute towards the children’s maintenance and educational costs but that he chose not to do so – this is notwithstanding the fact that he was unemployed from November 2008. I also accept that he most probably borrowed some funds from his current wife to pay for the maintenance and educational costs up until January 2009. Unfortunately this has not been quantified or verified in any way. However I am not of the view that the husband has amassed any secret assets. I also accept that his present standard of living is due to the fact that his wife is able to support the both of them to a reasonable standard.       

Leave to enforce the arrears of maintenance    

30.  Section 12 of the Maintenance Proceedings and Property Ordinance provides that the leave of the court is required to enforce maintenance payments which are due more than 12 months before the date of commencement of the application for enforcement. The starting point is that arrears exceeding 12 months will not be enforced unless there are special circumstances see CYM v YML and CSL v WWK. The rationale behind this rule traditionally was that if an applicant could wait for a year before bringing proceedings for enforcement then it was more likely than not that he or she did not need the money.  It has been said in CSL v WWK that:

‘In modern times, more flexibility is shown because the wife might have savings of her own which she might use for a period of time, and she would be expected to seek reimbursement by a large single payment from the husband later on’.”

‘Nonetheless, the court should still pay regard to the extent the applicant has taken to assert her rights. The fact that a person liable to pay the maintenance is an irregular or reluctant payer is not unusual circumstances justifying a departure from this rule’.”

31.  In this instance the wife did not issue proceedings until approximately 4 years after the husband stopped paying her any maintenance or to contribute towards the education costs. She says that this was because:

26.   The divorce between me and the Respondent was conducted on an amicable basis and I took pity on the difficult position the Respondent was facing.  Therefore I tried my best to assist him to find employment during the first few years after the divorce.  As reflected in my emails to the Respondent, on one hand, I had negotiated with him and made suggestions as to how I could assist him to resume his financial responsibilities towards the Children.  On the other, I tried to make ends meet by cutting back my spending and relying on my savings to provide for the Children, even though I was laid off by my former employer in 2008 and had struggled to rebuild my career.

27.   I tried to handle this matter in the United States and to chase for the Respondent’s outstanding contribution towards the Children’s maintenance and educational expenses.  However, I am advised by my US lawyer and I believe that there is no reciprocity with Hong Kong Court orders; therefore I must appeal to the Hong Kong Courts now.

32.  I accept that up to a point. I also accept that the wife e-mailed the husband directly on a number of occasions in an attempt to assist with his employment search and generally. However it was not until the 27 November 2012 that she instructed solicitors to write to the husband in an attempt to obtain payment of the arrears that had accumulated up until that point. This was two years after the husband first stopped paying. The husband did not respond to that letter. The wife’s solicitors wrote again on the 21 February 2013 and once again the husband ignored their letter. This left the wife with little option but to issue proceedings. In such circumstances it seems to me that the wife had not waived her right to seek payment of the arrears. On balance then I will give the wife leave to enforce the arrears of maintenance that are over 12 months old.

Conclusion

33.  In conclusion then I will order that the husband be discharged from his undertaking V1 and order 1 as contained in the court order dated the 14 October 2015 shall be dismissed with effect from the date of his Notice of Application to vary i.e. the 14 February 2014. In doing so I accept, save as is set out in this judgment that the husband will not be in a position to financially contribute towards the girl’s maintenance and education costs going forward. I am comforted a little by the fact that the wife has been able to put US$400,000 aside for that purpose. I also acknowledge that this may not be sufficient especially in the event that the girls wish to undertake post graduate or further study of any kind. Unfortunately in that event it may be necessary for them to take out student loans. I accept that this was not the original intention of the parties’ as evidenced by the consent summons. However given the material change of circumstance of both parents there may be no other alternative. For the avoidance of doubt then the wife is entitled prima facie to enforce arrears of maintenance from February 2009 to February 2014.  

Judgment Summons

The law

34.  I have also set out the law on judgment summonses in other judgments that have been handed down by this court. This will be repeated here as follows - the judgment debtor is required to show cause.  He has to show the court why he should not be committed to prison for contempt.  The court needs to ascertain whether he had the ability to make the payments ordered and whether he has wilfully failed to do so.  The judgment creditor needs to prove this beyond reasonable doubt.

35.  The court has the power to commit a judgment debtor to prison for up to three months or to commit suspended upon payment of the outstanding debt either in its entirety or by instalments, or to adjourn sine die with liberty to restore. 

36.  When considering the possibility of imprisonment, the court is bound by the claim made in the original judgment summons.  In other words, the court looks to the amount that the judgment creditor says is owed at that date and the judgment debtor is put to strict proof in relation to those amounts.  If the court is considering the possibility of making a new order in which the judgment debtor is, for example, asked to pay by instalments, then it is possible to calculate the outstanding amount due up to date, or to remit or suspend, or in some other way vary the amount owed. 

Discussion

37.  As set out above I accept that although the husband’s earning capacity is now much reduced, that he still has an earning capacity and one that as I have said he must now realize in order to contribute towards the children’s outstanding maintenance and education costs. I am also of the view that he had the financial resources available from the net proceeds of sale of the Baguio Villa’s property to contribute towards those expenses but that he chose not to do so. The husband has produced an unsigned contract dated the 16 April 2009 showing an estimate for construction works and new furniture in the sum of HK$756,390. It is the husband’s case that he was responsible for these costs. However no evidence has been produced in relation to the monies said to be due and owing to Ms KL for maintenance and education costs prior to October 2009 or generally. On a broad brush basis then even if I accept that the husband had to pay HK$756, 390, for the construction works that still leaves approximately HK$2,343,610 of the HK$3.1 million that was notionally the husband’s share of the net proceeds of sale. Of that it seems to me that at least HK$1.5 million should have been made available to cover the girl’s maintenance and educational costs. I do not accept that the HK$1 million transferred to the husband should only have been used by him to cover his own expenses, when it was clear that had continually failed to comply with the court order and he had also failed to issue an application to vary. 

38.  The wife has also raised an issue in her closing submission in relation to any interest payable on the outstanding sums due and a surcharge. These points were not raised during the hearing. The husband’s counsel complains about this and with some justification it seems to me. In any event I am approaching this on the basis that the HK$1.5 million that I intend to order the husband do pay shall be inclusive of any interest or surcharge payments. 

Conclusion

39.  Having heard the husband in the witness box it seems to me that at best he has failed to make proper allowance for the girl’s expenses from the net proceeds of sale from Baguio Villas. I accept that he does not have a very high earning capacity. However he does have an earning capacity of sorts. It seems to me that he should be able to earn at least HK$15,000 – HK$18,000 per month. On that basis I will make an order as follows:

1)    The Respondent shall pay the arrears of maintenance and educational costs in the total sum of HK$1.5 million inclusive of interest and any possible surcharge by instalments of HK$15,000 per month for 100 months, commencing on the 1 May 2015 and thereafter on the 1^st day of each succeeding month until full payment.

2)    For the avoidance of doubt any other sums of money said to be due and owing to the Petitioner under the terms of the order dated the 13 April 2006 shall be remitted

3)    The Petitioner’s judgment summonses dated the 20 November 2013 shall be adjourned sine die with liberty to restore.

40.  In so far as costs are concerned I accept that the wife had no alternative but to issue proceedings given the fact that the husband ignored her initial pre action letters. However it is also clear that funds are somewhat limited and that neither party has been wholly successful – although the wife has been more successful than the husband. In such circumstances I shall make an order nisi to be made absolute in 28 days time that a) the husband do pay 50% of the wife’s party and party costs of the judgment summons to be taxed if not agreed. b) He shall also pay the costs of the wife’s summons to enforce arrears that were over 12 months old dated the 17 February 2014 also on a party and party basis to be taxed if not agreed. c) There shall be no order as to costs in relation to the husband’s Notice of application to vary dated the 14 February 2014.