Z v. KY

FCMC 15184 / 2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 15184 OF 2002

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J U D G M E N T

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INTRODUCTION

1. This is an application by the Petitioner for an upward variation in the monthly maintenance payments.  Although the Petitioner and the Respondent have been divorced for some time, and the Respondent has now remarried, for ease of reference, I shall call the Petitioner “W” and the Respondent “H” in this Judgment.

2. The parties consented to an order on 9 June 2005 (“Consent Order”) under which H has been paying W a total of HK$8,500 per month, HK$3,500 for her maintenance and HK$5,000 for the maintenance of their son (“Y”).

3. Less than two years after the Consent Order, on 24 April 2007, W applied for an increase in the maintenance payments, from HK$8,500 per month to a total of HK$21,000 per month, being HK$12,700 for herself, and HK$8,300 for Y plus his tuition fees.

4. What initially appeared to be a rather straightforward application ended up in a trial lasting 12 days, over a period of one year.  The first part of the trial was over 4½ days in March 2008 (“1^st Part”), the second part of the trial was over 4 days at end of July, and another day in August 2008 (“2^nd Part”), when oral evidence was completed.  Then due to new discovery of evidence by H, the trial was re-opened for another 3 days in February 2009 (“3^rd Part”), and then finally another 2 hours in April 2009 (“Final Part”).

THE LEGAL PRINCIPLES 

5. There is no dispute between the parties in relation to the legal principles.

6. This Court has power under s.11(1) of the Matrimonial Proceedings and Property ordinance (“MPPO”) to vary an order for periodical payments.  How this power is to be exercised is set out in s.11(7) thereof, namely that 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.

7. The matters which the Court had to have regard were those set out in S.7 (1) and (2) of MPPO. S.7(1) and (2) are as follows :

“(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(a)    the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b)    the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d)    the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f)   the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g)    in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

(2)  Without prejudice to subsection (3), it shall be the duty of the court in deciding whether to exercise its powers under section 5, 6 or 6A in relation to a child of the family and, if so, in what manner, to have regard to all the circumstances of the case including the following matters, that is to say-

(a)   the financial needs of the child;

(b)   the income, earning capacity (if any), property and other financial resources of the child;

(c)    any physical or mental disability of the child;

(d)   the standard of living enjoyed by the family before the breakdown of the marriage;

(e)    the manner in which he was being and in which the parties to the marriage expected him to be educated;

and so to exercise those powers as to place the child, so far as it is practicable and, having regard to the considerations mentioned in relation to the parties to the marriage in paragraphs (a) and (b) of subsection (1), just to do so, in the financial position in which the child would have been if the marriage had not broken down and each of those parties had properly discharged his or her financial obligations and responsibilities towards him.”

8. Although it appears from the above wording of s.11 (7) that this Court is to have regard to all the circumstances of the case, including a regard to the circumstances de novo.  (see Lewis v Lewis [1977] 3 All ER 992), Garner v Garner [1992] 1 FLR 573 shows that does not mean the earlier order, whether made by consent or not, carries no weight.  In Hong Kong, in AEM v VFM, Civil Appeal No. 261 of 2006, 2008 HKCA 7, Judgment dated 10 January 2008, the Court of Appeal has summarised some of the relevant considerations of which there are the following:

“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.

7.  An increase in the wealth of the husband was a relevant factor to be taken into account: Primavera v Primavera [1991] 1 GLR 16 and Cornick v Cornick (No.2)[1995] 2 FLR 490.

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] FLR 282.”

9. Subsequent thereto, in another appeal, HCTT v TYYC 2008 HKCU 2022, Hon Tang VP has also said in paragraph 16 that even though a court’s jurisdiction to vary is untrammeled, normally the earlier order would not be varied unless there has been a material change in circumstances, or unless there are exceptional circumstances.

10. With the above principles in mind, I turn to the present case.

BACKGROUND AND HISTORY

11. I will set up briefly the background of this application.  W is now 46.  She was born in Hangzhou in Mainland China, and received education there to junior high school level.  After leaving school, she had worked for the Bureau of Standard Measure of Zhejiang Province, of which her father was a Director-General, from about 1986 to 1988.  At that time, according to W, she was earning not more than RMB 100 per month.  W met H in 1988 in Guangzhou through introduction of a friend.

12. H is now 49.  He grew up in Hong Kong and attended university in England, where he graduated with a Bachelor of Arts in Science.  He then returned to work in Hong Kong.

13. At the time when he met W, H was in the process of applying to emigrate to Canada.  He moved there soon afterwards.  The parties kept in contact, and a year later, in May 1989, H and W married in Hangzhou.

14. W moved to Toronto, Canada to join H in about December 1990.  Soon thereafter, H’s father also moved to live with the parties in Canada.  H bought an apartment in Scarborough, Toronto for his family to reside in.

15. H was at that time working as an Audit Senior at a Canadian Bank, earning what was equivalent to about HK$38,000 per month.  After W arrived in Canada, she enrolled in a course trying to learn English which was paid for by H, but apparently W later failed and gave up after about a year.

16. In about early 1992, W started working as a clerk in a warehouse, earning about Can $ 800 per month.  She continued working until summer of 1993 before their son Y was born.

17. Sometime in March 1993, H left Canada and moved back to Hong Kong.  The reason as to why he decided to leave Canada was a matter of dispute.  H said it was W who was ambitious and not satisfied with their then living condition and told him that her father had many business connections on the Mainland, and she urged him to leave Canada and to develop a business there.  W, however, said it was H himself who was not satisfied with his work and wanted to leave Canada, notwithstanding that she was pregnant at the time and she objected to H resigning from his job in Canada.  This is really all past history which is really not relevant now.  By all accounts, the parties were happily married at that time, and it must have been a joint decision for H to leave Canada first to try and set up a business in Mainland China, and that W would join him later.

18. H said that before leaving Canada, he had visited Hong Kong in November 1992 to discuss the feasibility of developing a business through W’s family with his relatives.  In January 1993, he said the boss of his brother-in-law, a Mr. Tse, showed interest and visited the parties in Canada, and agreement was subsequently reached between Mr. Tse and H to jointly develop a business in Mainland China.  In August 1993, with financial support from Mr. Tse, a company was set up by H in the Ningbo Free Trade Zone (“Ningbo Company”).  The Ningbo Company was to be involved in the distribution of “Pei Pa Koa”, a “herbal and honey extract”, and trading of other goods.  The Ningbo Company was owned by a Hong Kong company Netwide Limited (“Netwide”), as to 75,000 shares thereof by Mr. Tse, 25,000 shares thereof by a partner of Mr. Tse in Hong Kong, and the remaining 100,000 shares by H.  Netwide was the only registered shareholder of the Ningbo Company. 

19. H told this Court that after leaving Canada, he returned to Hong Kong and rented a room in Homantin at the time.  He never had a home nor lived in Ningbo.  His base was Hong Kong and he was commuting between Hong Kong and Ningbo.

20. W remained in Canada for a little longer after H left. She gave birth to Y in October 1993.  H did return to Canada to visit W just before Y’s birth, and stayed with her for about 10 days.  Y is now about 15½.

21. After the birth of Y, W did not resume working, and was receiving allowances from the Canadian Government and financial support from H.

22. In January 1994, W left Canada with Y, then only about 3 months old, and moved back to Hangzhou.  She resided with her parents at their home in Ningbo.  Thereafter, H would commute between Hong Kong and Hangzhou/Ningbo.  Whenever H was in Hangzhou, he would be staying at W’s parent’s home to be with W and Y, and this would be at least once a month.

23. There was much dispute over what happened and why H decided to leave the Ningbo Company.  Suffice to say, for various reasons, towards end of 1994, H decided to return to work for a bank in Hong Kong, and left the Ningbo Company in the hands of W.

24. W was appointed the General Manager for the Ningbo Company on 1 January 1995.  H, claimed that after W took over the company, there were disagreements in the management of the company between Mr Tse’s daughter and W.  W disputed this.  What was not disputed was that shortly thereafter, Mr. Tse and his family decided to withdraw from the Ningbo Company.  Finally, according to W’s evidence in her earlier affirmations and the earlier part of the trial, the Ningbo Company ceased business in about May 1995. 

25. Then there was a settlement between the parties jointly with Mr. Tse.  On 30 June 1995, the parties signed a loan agreement with Mr. Tse (the “Loan Agreement”), whereby H and W were to repay Mr. Tse a sum of US$264,300, being the amount of Mr. Tse’s investment in the Ningbo Company.  This sum of US $264,300 was to be repaid by 5 annual instalments of US$52,860 each, the first of the said instalments being payable on 30 June 1996.  The Loan Agreement was prepared by a firm of solicitors in Hong Kong and W came her to sign it together with H.

26. When the Ningbo Company ceased operations, there were some cash/assets received/taken over by W (“the Remaining Fund”).  The amount of the Remaining Fund is one of the parties’ major disputes, which I will deal with later.  Anyway, with this Remaining Fund, W set up a new toy factory in Yuhang, near Hangzhou (“Toy Factory”).  Unfortunately, by 1998, according to W, the business of the Toy Factory took a worse turn, and eventually, in September 1999, the Toy Factory business license was cancelled when it failed to file annual report. 

27. In the meantime, with H living in Hong Kong, and W living in Hangzhou, their relationship gradually deteriorated.  According to H, since 1997, their relationship had become “cold” when W failed to return to Hong Kong to visit his father who was ill at that time.  According to W’s own petition, she claimed that she and H had been living apart since about March 1997.  Hence, the parties’ marital relationship in effect ended in early 1997, although they remained in name husband and wife.  Their marital relationship thus actually lasted only about 8 years.

28. According to W, H only visited W and Y in Hangzhou about once a year during Chinese New Year from 1994 to 1997, and after the parties’ relationship broke down, he then saw Y only once in January 1999 and once in July 2002 when W took Y to Hong Kong for a visit.  It has not been denied by H that he has had very little contact with Y since 1997.  W and Y have remained living in Hangzhou until now.

29. It is W’s case that she has not worked since the closing of the Toy Factory, and has simply remained at home looking after Y.  According to H, after the Toy Factory, W was operating a boutique with her sister in Hangzhou.  W has denied this. W’s earning capacity and financial resources are matters of dispute.

30. It is further W’s case that, by emigrating to Canada, she lost her resident’s status on the Mainland, and that she and Y are now both regarded as being “foreigners”.  They remain on the Mainland on a “visiting visa” which has to be renewed, nowadays every 12 months.

31. W petitioned for a divorce on in December 2002 and obtained a Decree Nisi on in November 2003.  She was granted custody of Y.  The parties then entered into the Consent Order in June 2005, and the Decree Nisi was made absolute in July 2005.

32. About 4 months later, in November 2005, H remarried.  His present wife lives in Shenzhen.  She lives in a flat bought in her name in April 2005, which cost about HK$1.2m, and H has been paying the monthly mortgage instalments of about RMB 8,000, since about January or February 2006.  According to H, the downpayment of the flat was paid by his wife.  The flat is now valued to be about HK$1m.

33. It is W’s case that at the time of the Consent Order, i.e. in June 2005, she agreed to accept a low sum of HK$3,500 for herself and HK$5,000 for Y due to H’s then financial difficulties, and his various loans, and that H was well aware that HK$8,500 per month was not sufficient for the maintenance of her and Y, and that she had let it be known to H that as soon as his financial situation improved, she would be seeking a review.

34. At the time when W made her present application, Y was about to complete junior high school at a local school, and W was seeking an additional HK$6,000 per month to the amounts she claimed above for Y to go and study in Canada summer last year.  According to W, Y, being regarded as a “foreigner” on the Mainland, would not be able to meet the conditions for admissions to a local senior high school, and that was why she would like Y to go to Canada last summer for further studies.

35. H strongly objected to Y going to Canada.  No application for leave to take Y to Canada had been made by W, notwithstanding H’s objection.  H had indicated that he would apply to restrain Y from going should W persist.

36. Shortly after the commencement of the 1^st Part of the trial in March last year, the parties had a discussion outside the court room, and they reached a compromise at the time.  W would wait and see whether Y would be accepted by the International School in Hangzhou (HIS).  If accepted, W would agree to Y going to HIS, instead of going to Canada.  H had at that time also agreed to pay for all the Son’s tuition expenses at HIS, if he were to be accepted.

37. When the parties returned to the Court for the 2^nd Part of the trial in July 2008, the Court was informed by W that as Y’s English was not up to HIS’s standard, he was unlikely to be accepted by HIS in September 2008, and W was then advised to enroll Y in a private boarding school in Hangzhou called Royal Queen’s Academy (“RQA”) for a period of 6 months commencing 1 August 2008, and after attending the course, Y could then try and apply to HIS for the second term. 

38. Based on what W told him, H then paid the tuition fees for Y for the 6 month course at the RQA of about HK$100,000, which included food and lodging.  Subsequent thereto, H found out that contrary to what W had told him and the Court, Y was in fact accepted by a local senior high school, which is a branch of the well known Hangzhou Middle School.  H maintains that his preference would be for the Y to attend a local school, and that he only agreed to pay for RQS, and HIS, under the impression that Y was not able to enter a local school.  H claims that W has totally misled him and the Court in this respect.

39. By the time the parties returned to the Court for the 3^rd Part of the trial, Y had been accepted by HIS, where he has been attending since. 

40. It is clearly Y’s wish to attend HIS for the time being, rather than attending any local senior high school, as seen in the social investigation report dated 25 August 2008.  Although W withheld from H and this Court that Y was accepted by the Hangzhou Middle School, Y has now settled in HIS, and having considered Y’s wishes and the contents of the social investigation report, in my view that there should not be any further disruption and that it is clearly in Y’s best interest to remain there for the time being.

THE PARTIES’ RESPECTIVE PROPOSALS

41. The parties’ positions kept changing during the trial, mainly due to the uncertainty of Y’s schooling. 

42. With Y now settled in HIS, the orders now being sought by W are:

(i)    H to pay periodical payments of RMB 5,250 per month (excluding educational and related expenses) for the maintenance of Y backdated to 24 April 2008.

(ii)    H to pay periodical payments of RMB 4,050 per month W for her maintenance, backed to 24 April 2008

(iii)   H to pay periodical payment of the respective sums of RMB 3,500 and RMB 2,900 per month to W for the payment of rental of residence and shared living expenses of W and Y, backdated from 24 April 2008

(iv)   H to pay H’s school fees of Y to HIS directly until graduation thereat and to pay his educational and related expenses of Y until he reaches the age of 18 of finish tertiary education, whichever is the later.

43. During the 1^st Part of the trial, and under the impression that Y could not be accepted into a local senior high school, H was prepared to agree to an increase for W’s maintenance based on the Consumer Price Index rate published for the Mainland China, which both agreed to be 7.7% for 2007.  H was prepared to pay for Y’s tuition fees at HIS, and to an increase in his maintenance from Hk$5,000 per month to HK$6,000 per month.  After discovering that Y was in fact accepted by a local senior high school, and upon new discovery of evidence, and upon not receiving any bonus in March this year, H’s latest position is:

(i)  the upward increase sought by W for herself should be dismissed.

(ii) For Y’s maintenance, H proposes to increase the monthly amount by HK$1,000 per month, i.e. from HK$5,000 per month to HK$6,000 per month.

(iii) Although H did agree to pay for Y’s RQA and HIS tuition fees, he said he was misled, and he now proposes that he and W should equally share the tuition fees of RQA and the HIS tuition fees, and he seeks reimbursement from W of half of the said tuition fees already advanced by H. 

GROUNDS OF W’s APPLICATION

44. W says one of the main reasons for her application is to provide financial support to Y’s senior high school education.  W’s main grounds for her application include:

(i)   The change in exchange rate of the HKD against the RMB.

(ii) The increase in inflation rate on the Mainland.

(iii)   The increase in general expenses of W and Y

(iv)   Improvement of H’s financial position since the Consent Order

(v) By early 2007, H should have paid off some of his debts, and thus his financial situation should have improved.

(vi)   The inflation in Hangzhou has been very high, and the living costs of W and Y have increased substantially.

THE MAIN ISSUES

45. In my view, the main factual issues of this application are as follows:

(i)    The Remaining Fund of the Ningbo Company

(ii)    W’s financial situation

(iii)   W’s earning capacity

(iv)   The reasonable expenses of W and Y

(v)   H’s financial situation and his ability to pay

46. As I have mentioned earlier, the trial was originally set down for 3 days but eventually lasted for about 12 days over a one year period.  There has been lengthy cross examination, and the parties had to be recalled on several occasions, and the trial had to be re-opened after the 2^nd Part.  There were disputes over issues which took place over 14 years ago, which the parties had claimed would go towards their respective credibility.  I have had the opportunity to observe the parties when they were giving oral evidence.  There are a total of 7 affirmations, including 3 filed before the Consent order, and 3 Form Es from W, and an affirmation from W’s friend Mr. Ng.  So far as H’s concerned, there are also a total 7 affirmations, including 3 filed before the Consent Order and 2 Form Es.  For the avoidance of doubt, insofar as the matters set out in this judgment differ from the evidence of the H or W, this is because I have preferred the evidence of the other party, as I have had the chance of observing the demeanour of these parties, or because I consider that the documents produced confirm my finding of fact.

47. I now come to the main disputed factual issues.

(i)  THE REMAINING FUND OF THE NINGBO COMPANY

48. H has attacked W’s credibility throughout.  In particular, H said he started the Ningbo Company because of W’s parents’ connections in the Zhejiang Province and it was H’s father who invited H to start a business in Ningbo, and that W was involved in the Ningbo Company as soon as she returned from Canada.  W, however, disputed this. 

49. H came from Guangdong Province, and appeared to have no connection with Zhejiang Province except through W and her family.  H chose to start his business in a free Trade Zone in Ningbo of Zhejiang.  As I have said, at that time, the parties were still in a good marital relationship, and W must have given H her support.  It would therefore be natural to expect W’s parents would also help since W’s father was once a senior official at the Bureau of Standard Measure of Zhejiang Province.  In fact, W’s mother was named as one of the 6 executive directors of the Ningbo Company when it was formed.  Furthermore, there was a letter dated 11 May 1995 from the investor Mr. Tse to W’s father setting out the reasons why the company could not continue (“Mr. Tse’s Letter”) (B 3 p.1296).  It is clear from Mr. Tse’s Letter that he showed great respect to W’s father, and that in the said letter he gave 3 reasons for wanting to wind up the Ningbo Company, and he had expressed gratitude towards W’s parents, H and also W, and all employees of the company for past two years. 

50. Having considered the above and Mr. Tse’s Letter, I am satisfied that W’s parents clearly were quite involved and had helped with developing the business of the Ningbo Company.  I therefore accept H’s evidence that he started the Ningbo Company in Ningbo in Zhejiang Province with W’s parents’ connections and help in mind. 

51. It is H’s case that not long after W returned to Hangzhou, sometime in about August 1994, she became involved with the Ningbo Company.  W denies this and says she did not become involved with the Ningbo Company until 1 January 1995 when she was appointed its General Manager.  W later produced a copy of an airline ticket reservation and copies of her old passport to show that she went back to Canada in July to apply for her Canadian citizenship. 

52. Although during the trial, W said that until 1 January 1995 she had never been to the Ningbo Company or worked there at all, in her 2^nd affirmation, she did say that she joined the operation of the Ningbo Company in about November 1994.  Thus, in my view, W must have started to be more actively involved in the operative side of the company towards the end of 1994.  This was also reflected in paragraph 10 of her 7^th affirmation. 

53. I accept that all this took place over 14 years ago, and the parties’ memory may have become somewhat faded. 

54. W gave several reasons as to why she decided to formally join the Ningbo Company as General Manager, and one of the reasons she gave was that H had “overdrawn” on the company’s account, by false accounting, namely some payments which were recorded on the company’s financial statements as having been made to other companies were in fact pocketed by H.  This, according to W, was about US $40,000.  Notwithstanding that the business of the Ningbo Company was at that time not really going well, W said that it was H who “begged” her to go and work for the company towards end of 1994 as he wanted her to help “conceal” or to repay the amounts overdrawn by him, and that she agreed to help.

55. In relation to this alleged sum of US$40,000 “overdrawn” by H, W in the 2^nd Part of the trial produced a “Hand Over Record” dated 7 January 1995 (P-12) when she took over the management of the Ningbo Company.  W alleged the US$40,000 was the 2 sums of “pre-paid” amounts of US$20,000 each listed in the Attachment 2 of P-12, which were false accounting.  It is H’s case that this amount of US$ 40,000 was in fact the amount of salaries and expenses paid to him by the Ningbo Company, and H produced a letter signed by W’s mother (B1:58), who was one of the directors, to this effect.  W, however, again disputed this, and claimed that the letter was signed by W’s mother in blank.  W had also produced a letter dated 2 May 1995 from H’s friend who introduced Mr. Tse to H (P-19).  W claimed that in this letter, which was addressed to W’s father had referred to the details of the “false” expenses. 

56. Much time again has been spent on this issue.  Notwithstanding what W had alleged, I am satisfied that there was no sufficient evidence that a total sum of US $ 40,000 had been withdrawn by H in any fraudulent or improper way.

57. Whatever happened, shortly after W joined, about 4 or 5 months, Mr. Tse and his family decided to pull out from the Ningbo Company.  From Mr. Tse’s Letter, it is clear that since about February 1995, problems were already surfacing.  Although H had alleged that there were differences in the management of the company between W and Mr. Tse’s daughter, I do not think W was to be blamed for Mr. Tse and her family withdrawing from the company. 

58. According to W’s evidence during the 1^st Part of the trial, due to tax reasons, although the business of the Ningbo Company had ceased in about May 1995, the registration of the Ningbo Company with the authorities was never formally cancelled.  However, in paragraph 10 of her 2^nd affirmation, she did say she had wound up the Ningbo Company.  During the 1^st Part of the trial in March, and in his earlier affirmations, H did not dispute that the business of the Ningbo Company had ceased in about May 1995.  His later investigations, however, turned up information which showed otherwise. 

59. One of the parties’ main disputes was the amount of the Remaining Fund, i.e. cash and/or assets taken/received by W from the Ningbo Company at the time in May 1995 when W claimed that the company had ceased business.  It is H’s case that the Remaining Fund should be in the region of RMB 3.2m, which W maintained was only about RMB 570,000. 

60. H had produced 6 monthly Financial Statements including Balance Sheets as at 31/12/1993, 31/7/1994, 31/8/1994, 31/12/1994, February 1995, March 1995 (B2: 812-846).  According to H, these Financial Statements/Balance Sheets were prepared by an independent firm of accountants, namely Ningbo Certified Public Accountants.  For those 3 months in 1994, the statements were signed by the then General Manager a Mr. Shi and the then General Accountant a Mr. Shu.  After W was formally appointed the General Manager, the statements for February and March 1995 purportedly bore her signature as General Manager and the signature of the General Accountant employed by her, namely her cousin Mr. Koo.

61. According to the Balance Sheet as at end of March 1995, the Ningbo Company had “Total Working Assets” of RMB 6,418,896.30 consisting of, inter alia,

(i)	Cash in bank	RMB 1,790,882.10
(ii)	Accounts Receivables	676,832.89
(iii)	Pre-payment to Suppliers	2,332,088.00
(iv)	Inventories	1,405,428.76

62. The “Total Possessor’s Equities” amount to approximately RMB 3.2m as end of March 1995, and H said the Remaining Fund should be about RMB 3.2m.

63. W initially disagreed with these Financial Statements, and claimed that they were not accurate, and that had the Ningbo Company had so much left, H would not have returned to work in Hong Kong and Mr. Tse would not have pulled out.  However, W was unable to explain why some accountants from an independent firm would want to make up the above figures.  W claimed that the Ningbo Company was not in a healthy state when she took over, and she had claimed that she did not know how the accountants arrived at the figures in the Financial Statements.  At one stage, during the part of the trial in March, W seemed to be saying that her own cousin was helping H to prepare false accounts.  Further, at that time, W was also saying that the signature on one of the statements (B2:819) was not her signature, but agreed that the signature on the March 1995 Financial Statements was indeed hers, although she said the “signature” of Mr. Koo was in fact signed by her on Mr. Koo’s behalf. 

64. Having made the above allegations in 1^st Part of the trial, during the resumed 2^nd Part of the trial, W herself then suddenly produced a “Hand Over Record” (P-12) during cross examination.  The figures on this Hand Over Record were in fact consistent with the figures on the Balance Sheet as at 31 December 1994 (B2:834), except P-12 provided more details.  In the attached “Incorporation Information”, there was referred a Sale and Purchase Agreement of a property, and also there were other documents which set out information about mini van, and stock.  It is H’s case that the Ningbo had acquired a property. 

65. In my view, there is no reason to doubt the authenticity of the Financial Statements produced by H, or for that matter, the Hand Over Record, and I accept them as evidence of the financial position of the Ningbo Company at the relevant time. 

66. W admitted that she was the single signatory of the bank accounts of the Ningbo Company, but she claimed that H was aware and agreed to her using the Remaining Fund to invest in the Toy Factory.  This was denied by H.  W had also claimed that she had repaid part of the loans to Mr. Tse out of the Remaining Fund.  H did not appear to have denied this.  Anyway, from the evidence H clearly knew about W setting up the Toy Factory.  Furthermore, he had left the Ningbo Company in the hands of W, and the Financial Statements of the Ningbo Company were in his possession, whether the Remaining Fund was indeed RMB 3.2m or not, he had agreed to W receiving the same. 

67. As mentioned earlier, during the 1^st Part of the trial, although W had referred to the Ningbo Company having ceased business in May 1995, according to her as the Ningbo Company never obtained any tax clearance from the Tax Department, it could not be properly wound up and was thus not wound up.  According to W, at the time of cessation of business, there was no stock, only receivables of about RMB 670,000, which she tried to collect, but only managed to collect about RMB 300,000, and this was part of the Remaining Fund of RMB 570,000, the balance of RMB 270,000 of the Remaining Fund was the cash balance then held in the company bank account.  Although, initially she said she issued a cheque to withdraw RMB 500,000 from the Ningbo Company’s bank account to pay into the Toy Factory account, later, she changed her evidence and said the amounts collected from the “Receivables” were credited direct into the Toy Factory’s account.  W later also claimed that she had repaid Mr. Tse about RMB 400,000, and that before she made this repayment, in fact, the cash balance in the Ningbo Company bank account was about RMB 600,000 to 700,000.  After repayment of about RMB 400,000 odd from this amount, t he balance was only about RMB 200,000 to 300,000.  This, together with the “Receivables” collected by her then formed the Remaining Fund, which was then invested into the Toy Factory. 

68. According to W, there were 4 boxes of accounts documents at the time of cessation of business of the Ningbo Company, which she said she kept for 7 or 8 years until 2003 when she destroyed them.  W had produced no documents during the 1^st Part of the trial, but suddenly managed to find the Hand Over record during the adjournment, which she produced only during the 2^nd Part of the trial.  W issued the divorce proceedings towards end of 2002, but the Consent Order was not reached until June 2005.  Even in those days, the Remaining Fund of the Ningbo Company was a matter of dispute, and I do not understand why W would want to get rid of the accounts documents in the middle of the then proceedings.   

69. The only persons who could perhaps help to clarify the financial situation of the Ningbo Company in May 1995 would be Mr. Tse and his daughter Miss Tse, who both live in Hong Kong.  Neither H nor W decided to call either Mr. Tse or his daughter in the end.

70. Without Mr. Tse and Miss Tse, apart from the parties themselves, the only other evidence before this Court were the documents produced by them, including the Financial Statements, and the Hand Over Record, which I have accepted as reflective of the company’s then financial position.  As at end of March 1995, the total “Possessor’s Equities” were about RMB 3.2m, but this included the initial capital invested by Mr. Tse, which was about RMB 2.88m (or US$500,000, @US$1 =RMB5.762, rate as seen on P-20(a)).  It was not denied by H that of this US$500,000, US$200,000 was later withdrawn under the item “Pre-paid to Suppliers” in the Balance Sheets and as shown in the Hand Over Record, to a Hong Kong company of which Mr. Tse was the majority shareholder, and the payment voucher produced by W in her 7^th affirmation (B6:2265), allegedly for pre-payment for purchase of stock/medicine.  Thus, it seems that the Remaining Fund could not have been as high as H was alleging.

71. W’s evidence was that with the Remaining Fund from the Ningbo Company, she started the Toy Factory.  As above mentioned, according to W, the business of Toy Factory started to dwindle to almost nil in about March 1998, and that the Toy Factory was later wound up when its business licence was cancelled on 23 September 1999 (B6:2167).  Again, she now says there are no records.  However in her solicitors’ letter of 23 October 2003, it was stated that she had “put away” all account records of the Toy Factory (B2:798).  At time of winding up of the Toy Factory, according to W, there were only several thousands remembi of receivables left.

72. After the 1^st Part of the trial, H then decided to conduct some investigation.  Just before the 2^nd Part of the trial resumed at end of July 2008, H produced a company search record of the Ningbo Company in his 5^th affirmation, which showed that the shares of the company were transferred to a very famous businessman in Hangzhou.  H then conducted further investigations, and found that the Ningbo Company was not wound up until January 2008.  The company had a total equity of about RMB 46.7m as at the period ending 2007 W and her mother were directors until June 2006, and H further claimed that documents relating to change of management filed subsequent to May 1995 which he obtained from the Companies Registry of Ningbo and which bore signatures of H, Mr. Tse and his family, and employee were all forged. 

73. In her 7^th affirmation, W provided an explanation.  She said as the Ningbo Company owed tax, the Tax Department started to demand payment from her parents.  As it was a criminal offence to owe tax, W’s parents then apparently discussed the matter with their friend, a Mr. So, who was willing to take over the company.  W said her mother had telephoned H to notify him of this matter.  W also claimed that the businessman registered as the shareholder could be Mr. So’s son.  Thus, it now appears to be W’s case that the Ningbo Company was taken over by Mr. So and/or his son, so that the tax could be paid.  However, during the 1^st Part of the trial, her evidence was at the time that the tax was still outstanding and that H was still the “Authorized Representative”.

74. According to H, Mr. Tse had a stroke in 1998 and has become a “vegetable” since, and it was not possible for him to sign any documents, and also Netwide had already been wound up in January 1996 as shown from the Hong Kong Companies Registry search records, and any signature allegedly on behalf of Netwide thereafter would also be impossible.  W denied that she or her parents forged any signatures, and when under cross examination during the 3^rd Part of the trial, appeared to be pointing fingers to Mr. So and/or his son.  However, during cross-examination, H did admit that he had signed in blank on Netwide letterhead to hand to W for her to deal with the Ningbo Company.  In fact had also produced some of these still in her possession (P-5).  I accept that it could be that some of these had been used, but since these were in W’s possession, then it must have been her or her family who could have used them or allowed others to use them.

75. Anyway, since the amount of tax allegedly owed by the Ningbo Company was only about RMB 80,000 odd, one would have thought W could have paid this out of the Remaining Fund, and I cannot understand why W failed to pay this sum out of the receivables and/cash at the time when W claimed that the business ceased.  In fact, it appears that the amount of taxes was reflected in the Balance Sheet for period ending March 1995 (B2:823).

76. If W’s parents decided to let the Ningbo Company to be taken over by Mr. So and/or his son, W, being the then General Manager, should have the duty to see that this take over being conducted in a proper manner.  The letter of employment of Mr. So’s son as Vice General Manager dated 23 June 1997 was co-signed allegedly by W’s mother, although W denied that was her mother’s signature.  It is also clear that Mr. So’s son had taken over as “Authorized Representative”, and it was no longer H, as W had told the Court during the 1^st Part of the trial.  It appears from the documents that there was no change in ownership and Netwide remained the only shareholder even after it had been wound up.  

77. It is not clear whether W and/or her mother received any benefit for allowing Mr. So to take over the company, apart from what she now appears to be saying, to have the tax liabilities of RMB 80,000 odd being cleared off.  As H had pointed out, Ningbo Company was registered in the Ningbo Free Trade Zone and thus enjoyed special tax benefits, which could therefore be an incentive for a purchaser.

78. From the documents retrieved from the Companies Registry of Ningbo, at the time of winding up of the Ningbo Company in January 2008, the company appeared to have had about RMB 46m (B6:2163), and the company paid almost RMB 14m taxes over the years 1997 to 2007, and that it appeared the RMB 46m was all from profits over those years.  There was no satisfactory explanation from W as to why she and her mother had remained directors until June 2006.

79. H further conducted investigation on the Toy Factory after the 1^st Part of the trial, and he found that the initial registered capital of the Toy Factory was RMB 5m.  W’s explanation was that as she did not have this amount of capital to start the Toy Factory, she found a “ service company” which provided the registered capital, and then after checking by the authorities, the amount would be withdrawn, and the service company changed a fee for this service.  W denied that she had ever injected RMB 5m into the Toy Factory at the time of its incorporation.  H had also at one stage alleged that W had given an incorrect name of the Toy Factory in her affirmations, and that was why he was unable to conduct investigations earlier on this company.  Anyway, W did eventually tell the Court the correct name of the Toy Factory during the 1^st Part of the trial, and further confirmed the name in a letter from W’s solicitors of 18 September 2008 (p.2273). 

80. The parties had spent much time during this trial regarding the Ningbo Company and the Toy Factory.  Whatever happened, it would appear that at the time of May 1995 when Mr. Tse and his family withdrew, H was already working for a Hong Kong bank with a then monthly salary of about HK$37,000, there was no evidence that the parties had any other substantial assets, apart from the Remaining Fund.  They had a liability to Mr. Tse of US$ 264,300, i.e. about HK$2m, which they were not able to pay at the time.  Whatever the amount of the Remaining Fund was, that and their interest in the Ningbo Company must have been the parties’ only assets, and they were all received by W. 

81. After February 1997, H did not return to Hangzhou to visit W or Y.  W said she had written to H informing him about the winding up of the Toy Factory, but H denied having ever receipt such a letter, or indeed any knowledge as to when W started or ceased the Toy Factory.  After February 1997, the parties were clearly leading separate lives, and there was hardly any communication between them, and thus H had little information on W’s finances.  But in 1995 or 1996, the parties’ relationship had not yet broken down completely.  It is impossible for the Court now to draw conclusions as to the amount of the Remaining Fund but I believe that it was unlikely that W would herself have as much as RMB 5m to inject into the Toy Factory at the time of its incorporation date 16 August 1995 (B6:2166) without any knowledge of H.  On the other hand, W’s figure of RMB 570,000 appeared to be on the low side for the starting of a business on her own which required a registered capital of RMB 5m.  What happened to the property or, as W had described, a bare site acquired by the NingBo Company was also not clear and presumably it was taken over by Mr. So and/or his son.

82. W’s explanation as to why the registered capital of the Toy Factory needed to be as high as RMB 5 m was because this was the minimum requirement of capital for incorporation of a new company employing a “foreigner”.  There was no documentary evidence produced by W as to what she said.  Anyway, W said she had to turn to a ‘service company’ for help, namely this ‘service company’ would provided the required capital, and after the examination and certification of capital injected, the amount would be withdrawn by the ‘service company.’  W did not provide any details of the ‘service company’ used by her, saying she could no longer trace it as it was such a long time ago.  She only produced copies of current newspaper advertisements in September 2008 as supporting evidence that such service is available. 

83. According to the “List of directors, managers, members of the supervising committee” of the Toy Factory (B6:2171) there were 6 directors registered, W being the managing director and general manager, and according to W’s 7^th affirmation, one was an employee of the Toy Factory and the others were provided by the ‘service company’.  Two directors on the List were stated to be representatives of a Yuhang External Trade Company.  According to the Capital Examination Report (B6:2182), there were two parties/investors, a Taiwanese Residents Association in Yuhang (Party A) which had paid RMB 4m, and the other the Yuhang External Trade Company (Party B) which had paid RMB 1m.  It was W’s evidence that all this was all arranged by the ‘service company’. 

84. The various registered documents obtained by H relating to the Toy Factory were dated from 1995 until 1999, and they were purported signed by some of the directors and by W.  W had claimed some of these documents which bore her signature was in fact not signed by her.  Further there was another document dated 8 May 1996, which appeared to be minutes of a directors’ meeting relating to expansion of business and change of address (B6: 2173).  W has denied that the signature which purported to be hers was indeed her signature.  W’s case was confusing, since she claimed the Toy Factory was her business.  Further, I find that ‘service company’ could not have provided its services for the Toy Factory for so many years.  Even though I find that there was no sufficient evidence to conclude that W herself would have as much as RMB 5 m to be injected into the Toy Factory at the time of its incorporation, it could not be ruled out that she could have other genuine investors as I find her evidence generally not satisfactory.  Anyway, the business of the Toy Factory appeared to be larger than W had tried to portray. 

85. Furthermore, I also find W’s evidence in relation to what happened to the Ningbo Company not satisfactory.  She claimed that she was in Yuhang at the time involved in the Toy Factory, and that she left everything to her mother.  Some of the documents retrieved from the Companies Registry on the Ningbo Company, however, also bore W’s signature (p.2240).  As W was the General Manager of the Ningbo Company, it does not seem credible that she did not know about the company being taken over by Mr. So and/or his son.  During the 3^rd Part of the trial, she seemed to be alleging that H knew all along about the transfer to Mr.So.  I would not have thought that H would not have spent time and money to instruct lawyers to investigate if he had known.  H seemed to be genuinely surprised at the result of his investigation, and I accept his evidence that he himself was surprised to find that the company was only wound up on 7 January 2008. 

86. As I have said, the parties have spent considerable time during the trial over the Ningbo Company and the Toy Factory, and I accept W’s evidence was not satisfactory in many aspects as above mentioned.  The Toy Factory’s formal demise was only about 3 years before W issued the petition, and she could have obtained relevant documents at the time, and I find it surprising that in her affirmations filed at that time before the Consent Order, she did not even state the correct name of the Toy Factory.  W had said the 4 boxes of accounts documents of Ningbo Company were destroyed in 2003 This was after the divorce proceedings started and before the Consent Order was reached, when even at that time, there were disputes as to what happened to the Ningbo Company and the Remaining Fund.  I therefore find it surprising that she would decide to destroy all such documents before the matter was settled.  Further, having said that all documents had been destroyed, W then produced the Hand Over Record.  I have to say that all this plus her own unsatisfactory evidence as to what happened unsurprisingly drew suspicion on herself. 

87. It is therefore not clear as to whether W and/or her mother could have received benefit from letting Mr. So and/or his son take over the Ningbo Company and while remaining as a director of Ningbo Company until June 2006.  It is therefore not clear as to whether there were other investors in the Toy Factory or merely an arrangement by a “service company”.  The fact remains that W failed to disclose the involvement of Mr. So and/or his son in the Ningbo Company, or the involvement of a “service company” in the Toy Factory, until H found out such information.  I am therefore of the view that W has not made full and frank disclosure in relation to the Ningbo Company, or the Toy Factory. 

(ii) W’s FINANCIAL CIRCUMSTANCES

88. In her 2^nd Form E, W claims that she has only one bank account in Mainland China, which is the savings account at the Bank of China (“BOC Account”), which she opened on 19 May 2005 for the purpose of receiving maintenance payments from H after the Consent Order, but in fact in her 1^st affirmation filed in May 2003, she had disclosed a savings bank account with the Bank of Construction (“CB Account”), which was opened on 30 March 1998.  Under cross-examination, W said that in 1998, she had a work visa, and she had this other bank account, but later, she said as she lost the work visa, she was unable to use this account.  When this Court asked her to clarify her answer, she appeared to change her evidence and said thereafter she had no money and therefore she did not need to use this account. 

89. According to W’s own evidence, she was receiving RMB 3,000 to RMB 4,000 per month, in cash, as salary from the Toy Factory.  W also admitted under cross-examination that she did have another account opened in Yu Hang, where the Toy Factory was situated, but said that was cancelled long time ago. 

90. In her 3rd Form E, she disclosed assets of only HK$46.51, and liabilities of about HK$542,200.

91. W had said in her 1^st affirmation that between 1994 and 2000, the total amount of maintenance that H paid her over all those years did not exceed RMB 70,000, and that she had to rely on her parents for the daily expenses of the Son and herself.  Then, according to her, between 2000 and end of 2002, H did not pay any sums at all, and it was only later, as from December 2002, he started to pay interim maintenance of HK$4,800 per month until the Consent Order.

92. W’s 1^st affirmation was filed at the end of 2003.  There was no reference to any loans from any friends or her younger sister or any one else in this affirmation, and she merely said she relied on her parents for financial support.  In fact in the first 3 affirmations filed by her, the 3^rd one being filed on 6 December 2004, there was no mention by her of any loans.  It was only in her 1^st Form E filed in April 2005 that she suddenly claimed she had liabilities of HK$1,098,000, which included a sum of HK$780,000 (US$100,000) to Mr. Tse, and a sum of HK$78,000 to her solicitors.  She alleged that she owed her younger sister HK$160,000, a friend Miss Kwong HK$50,000, and a friend Mr. Ng HK$30,000.  Apart from the liabilities to Mr. Tse and legal costs, the rest of the liabilities seemed to be incurred within 5 months, i.e. between December 2004 and April 2005.  Yet, with such liabilities of at least HK$240,000 (excluding the loan to Mr. Tse and costs), she then decided to accept the terms set out in the Consent Order a month later in June 2005.

93. By the time of her 2^nd Form E at the end of January 2008, her liabilities had further escalated:

(i)    her younger sister RMB 250,000 (i.e. HK$271,250)

(ii)    her friend Miss Lee  in the Mainland RMB 120,000 (i.e. HK$130,200)

(iii)   her friend, a Mr. Ng,  RMB 108,000 (i.e. HK$117,180)

The above liabilities have remained the same in her 3^rd Form E filed recently in April this year, except there has been a difference in Hong Kong Dollars due to the exchange rate.  The total was approximately HK$518,600 in January 2008 (1 RMB=HK$1.085), and now approximately HK$542,200 (1 RMB = HK$1.1344)

94. Although W claims to have no earning capacity, and no income, her divorce and present application was privately funded until the trial resumed in July last year.  

95. W only arranged for her friend Mr. Ng to make an affirmation on the 4^th day of the 1^st Part of the trial, and she called Mr. Ng to attend trial on the 5^th day.  Mr. Ng also works for a bank in Hong Kong.  He met W in Canada in 1992 when they were working for the same electronics factory.  Mr. Ng then came to know both the parties, and that apparently W had maintained contact with him even though she left Canada and went back to Hangzhou. 

96. Mr. Ng was responsible for introducing W to her present lawyers, and that each time W came to Hong Kong, apparently Mr. Ng would lend her sums of about HK$10,000, plus another HK$2,000 for W’s hotel and travelling expenses during her various visits to Hong Kong starting from about 2002, and in 2005, there was an occasion when he lent her HK$45,000. 

97. According to what Mr. Ng had said in his affirmation, W owed him about HK$117,000, including the HK$45,000, which in his affirmation he said he did not ask W the purpose of the sum of HK$45,000.  He said during oral evidence that W told him she would repay all the sums later.  Mr Ng further said in his oral evidence that if W were to repay him about HK$110,000, then all loans would be repaid.  Mr. Ng’s calculations as to how he arrived at HK$110,000 did not seem to take into account the HK$2,000 for W’s hotel and travelling costs which he paid her on each of her visits here.  In W’s 2^nd Form E, the amount of the loan was given in RMB 108,000 and converted to Hong Kong Dollar using the then exchange rate.  Thus, W’s evidence at that time appeared to be the loans, including those from Mr. Ng, were paid to her in RMB.  It is, however, clear from Mr. Ng’s evidence during the trial, and indeed W’s own evidence during the trial that the amounts were given to her in cash in Hong Kong, apart from the sum of HK$45,000.  Anyway, I find that there were inconsistencies between Mr. Ng’s evidence and W’s evidence.

98. So far as the sum of HK$45,000 is concerned, according to Mr. Ng, in about middle of 2005, W called him from the Mainland, asking for a loan of HK$45,000.  Mr. Ng said as a friend in Shanghai owed him $40,000, he asked his friend to give W $45,000, and he later repaid his friend the difference of $5,000.  According to W’s old passbook of her BOC Account, there was a cash sum of HK$45,100 credited into her account on 26 May 2005.  Before Mr. Ng’s affirmation was filed, and before he gave evidence, W had said during cross examination that this was an amount lent to her by her younger sister and/or a friend of hers in Mainland China.  W later changed her evidence and corrected this.  Anyway, it is now W’s case that this loan of HK$45,000 was in fact paid to her in cash in RMB, and she then changed the cash into HKD to credit into her BOC account, and used it to pay her solicitor’s fees. 

99. As Mr. Ng works in a bank, one would have thought that there would be at least some record kept by him as to the exact amount of each loan, and the date it was paid to W.  It further seems that the first time Mr. Ng lent W money was when she came to Hong Kong in 2002, and this was before the Consent Order, and thus it seems that for 7 years, Mr Ng has not demanded any repayment.  

100. W claimed that she had never heard of the Legal Aid Department of Hong Kong until she was told by this Court while giving her evidence.  Mr. Ng also claimed that he did not know about the availability of legal aid in Hong Kong.  I must say that I find this rather surprising since Mr. Ng works in a bank, and has been living and working in Hong Kong since returning from Canada in 1997.

101. If, indeed, W has no earning capacity, no income and no assets as claimed by her, she should have been advised about applying for legal aid.  W ‘s solicitors even instructed counsel Ms Lui to appear for W during the 1^st Part of the trial in March.  According to her solicitors, on the 1^st day of the trial, W owed them HK$99,000.  Later, on the 4^th day of the trial, Ms Lui clarified that W’s estimated costs were HK$99,000, that she had already paid HK$69,900.  After W completed her evidence after the 1^st Part of the trial last year W then suddenly went to apply for legal aid.  She was later granted legal aid on 30 May 2008 to continue with the trial, although legal aid was not granted for her counsel Ms Lui to appear on her behalf.

102. During the 1^st Part of the trial, when asked about the loans from her younger sister, W said she had borrowed money from her sister to maintain her increased living expenses.  Then when asked whether there was any record of her alleged loans, W had said that she kept a “black book” in which she wrote down such amounts, and also she wrote the amounts on a calendar or memorandum, which she had forgotten to bring.  At the 2^nd Part of the trial, she was again asked about this record/memorandum.  None was produced nor did she call her sister as a witness.  I agree that since her sister’s husband runs a tourist business, and W herself had said her younger sister had been to Hong Kong, it would not be difficult for her sister to come to attend trial or to give evidence on behalf of W. 

103. After the 2^nd Part of the trial, oral evidence had in fact been completed, and the parties were to lodge their written closing submissions.  Thereafter towards late August, H suddenly found further evidence in relation to the Ningbo Company, the Toy Factory and that W is a joint registered owner of a property with her younger sister (“Joint Property”).  The address of the Joint Property is the address given by W as the place where her parents live, and this was also the address given in W’s 1^st to 5^th affirmations and her 1^st and 2^nd Form Es, although she did disclose in her 2^nd Form E filed just before the trial commenced in March 2008 a tenancy agreement of her then alleged residence.  According to H, the Joint Property is now worth RMB 2m.  W said in paragraph 29 of her 7^th affirmation that it was her parents who wanted to buy the Joint Property in December 1999, but they did not have enough savings, and therefore, they decided to use the money they had already given to W’s sister for her wedding, and W’s mother fixed deposits and cash at home in order to come up with RMB 240,000 to pay for the majority of the purchase price.  W’s sister then made an application for a mortgage loan of the balance of RMB 159,000 from the bank, but as her sister was then still on probation at her work, the bank did not approve her mortgage loan until the expiration of the 3 month probation period when her sister was able to produce a work certificate.  According to W, the instalments were then paid by her sister.  W said she and Y, and her parents moved into the Joint Property in May 2000 when all purchase price was paid.

104. In her 7^th Affirmation, W had produced a receipt dated 22 December 1999 from the developer of the Joint Property to show that a total sum of RMB 399,807 had been received in cash for the purchase price.  (B6: 2296).  W had further produced documentary evidence to show that W’s mother had fixed deposits of about RMB 110,000 (B6:2312-2314) at that time and that W’s sister had deposits totaling RMB 100,000 at the time.  According to W, another RMB 30,000 was cash from her parents’ home.  There was still a deficit of about RMB 160,000.  W said it was obtained by a mortgage by her sister.  Anyway, by 1998, the Toy Factory had no business and 1999 was also the year in which the business licence of the Toy Factory was cancelled and that W was allegedly unemployed, and had no income, and her sister had just started a new job and was on probation at the time of the purchase.  W’s father was a civil servant before he retired, and her mother was a retired university teacher.  On one hand, W seemed to be saying that her parents had little savings, and had to use the money they had given to W’s sister for her wedding, and had to use cash at home for the purchase of the Joint Property, and yet on the other hand, she said her parents paid for W’s and Y’s expenses from their pension and savings. 

105. According to W’s evidence during the 1^st Part of the trial, her parents’ home, i.e. the Joint Property is 150 sq m in size, which is about 1500 sq ft.  In paragraph 8 of W’s 1^st affirmation, she said her parents were paying the monthly rent of RMB 1,500 and the other expenses of her and Y, amounting to about RMB 4,500 per month.  Then when cross examined by Mr. Chung, acting for H, during the 1^st Part of the trial, she then said she was paying RMB 1,500 per month to her parents as rent.  Her evidence was thus again confusing and contradictory. 

106. Anyway, as mentioned earlier, for the divorce and up to the 1^st Part of the trial, W was instructing private solicitors.  W accepted the terms of the Consent Order, which if her case was to be believed, she would not have sufficient sums to repay her then liabilities.  It is interesting to note that neither her solicitors nor Mr. Ng appeared to have any great concern about W’s ability to pay/repay.

107. Furthermore, notwithstanding W saying that she had no money when she first started the divorce, in October 2004, she managed to travel to Vancouver and apparently resided there for a short while during the divorce proceedings, and before the Consent Order was reached, as shown in her 3^rd affirmation. 

108. Having considered W’s evidence, I do not find W’s evidence about her alleged various loans credible and I am of the view that she has not made full and final disclosure of her financial situation or financial resources.

(iii)  W’s EARNING CAPACITY

109. W was working before she married H.  She also worked during her stay in Canada.  Not long after W returned to Hangzhou, she started working, latest by January 2004 for the Ningbo Company.  She did not stay home as a housewife and at that time Y was only a couple of months old.  Her parents were helping her look after Y while she was working.   Even though her involvement with the Ningbo Company was short, she did run the business of the Toy Factory in Yuhang for about 4 years, and she also “helped” in her sister’s boutique. 

110. W claimed that she was only graduated from junior high school, but said she did attend evening classes when she was working.  W was cross examined at length about whether she was attending the Academy of Fine Arts in Beijing at the time the parties met.  W denied this in the 1^st Part of the trial, but later during the 2^nd Part of the trial, she herself produced an envelope addressed to her at the Academy of Fine Arts Costume Design Course in Beijing which contained a letter written by H to her (P-8).  She then explained that she was at the time working temporarily in Beijing, and had attended a short course on tailoring.  Anyway, even though W may not have received education to a level as high as H, she clearly is not an unintelligent lady, and she did take up work during the marriage, i.e. in Canada, at the Ningbo Company and the Toy Factory.

111. W claims that as she holds a foreign passport, she is now staying in the Mainland only as a visitor, with a visitor’s visa, and thus she is not able to work.  This may very well be the position under the law.  W has now been living in Hangzhou for over 14 years now.  She admitted to having a “work visa” previously but claimed that since the Toy Factory ceased business, she has not been able to obtain a work visa.  W has not been able to produce any documentary evidence of her income from the Ningbo Company or from the Toy Factory.  She claimed her income from the Toy Factory was only about RMB 3,000 to 4,000 per month, but said such amounts were paid to her in cash. 

112. Although W said the Toy Factory’s business came to nil in 1998, on 11 October 1999, there was a sum of RMB 10,000 credited into her CB Account.  It was put to her by H’s solicitor, Mr. Chung, that this amount was her income.  W claimed that the amount of RMB 10,000 was from H.  This was denied by H.  Anyway, this appears to be contradictory to her own evidence.  Earlier when she was giving evidence in chief, she said that after the Toy Factory ceased business, H only paid very small amounts of maintenance to her, sometimes RMB 5,000, sometimes RMB 8,000 each year.

113. According to H, for 1995 and 1996, he paid W cash of HK$10,000 during Chinese New Year when he returned to Hangzhou to visit her and Y, and when W came to Hong Kong once a year.  In 1997, H did go to Hangzhou during Chinese New Year and paid HK$10,000, but W did not come to Hong Kong that year.  The parties’ relationship broke down in 1997.  In 1998, H remitted HK$10,000 to W.  In 1999, during Chinese New Year, and he paid her cash of HK$10,000 then.  From 2000 onwards, he remitted about HK$10,000 to W each year, until July 2002, when W came to Hong Kong and the parties discussed about a divorce.  He paid her HK$4,800 in cash on that occasion, and thereafter remitted HK$2,500 to her twice towards end of 2002/early 2003, and then proceedings started.  W however, denied this, and said H only paid less than RMB 70,000 from 1994 to 2000.  Anyway, it did not seem that from her own evidence it was H who had credited the said RMB 10,000 into her CB Account.

114. There were also various credits in her BOC account.

115. In particular, there was a credit of RMB 6,000 credited into her BOC account on 19 September 2005, which W said was a loan to pay for Y’s school fees for the new term.  On that day, the balance in her said account was HK$8,500,being maintenance transferred from H, and the RMB 6,000, and yet on 21, 22, and 26 of the same month, the total amounts of HK$ 10,100 were withdrawn.  One would have thought if the alleged loan was to pay Y’s school fees in Hangzhou, it would not have been withdrawn/transferred into HKD.  There was another credit of RMB 21,700 into her account on 8 March 2006, which she said was a loan from her younger sister.  On 18 July 2006, she had a sum of HK$57,528.19 in her bank account, which was then transferred out.  According to W, this was transferred to her sister’s account.  She said that her sister was visiting Hong Kong and needed cash, and so she exchanged RMB for HKD from her.  When asked why she had HK$57,528.19 in her account, her answer appeared to be that rather than changing such sums from HKD into RMB, she was using the money her sister was lending her, and she then transferred the entire sum back to her sister.  If this was the case, then her funds with her sister’s funds appeared to be intermingled.  Anyway, the balance of HK$57,526.19 was clearly accumulated from the monthly maintenance of HK$8,500 paid by H.  Therefore, it would appear that such maintenance sums were simply left being accumulated in her account and transferred out as an entire sum.  W could have arranged for her sister to provide evidence by way of an affirmation or to come to Court as a witness to support W’s evidence, or to obtain necessary documentary evidence from the bank as to the destination of the sum of HK$ 57,528.19, which she did not. 

116. In view of W’s unsatisfactory evidence as to the various credits and debits/transfers out of her BOC account, I am not satisfied that she has not been involved in any kind of work or has no other income since the Toy Factory ceased business.  Holding a foreign passport did not prevent her from being the General Manager or a director of the Ningbo Company, nor starting the Toy Factory.  She worked for the Toy Factory in Yuhang, which was outside Hangzhou, for years when Y was much younger.  I am of the view that notwithstanding her holding a foreign passport, and with Y approaching 16 this coming October, there should be no reason why W should not be able to find work.  There is no medical evidence to indicate any physical or mental disability.  I am satisfied that W has an earning capacity.

117. H has not been able to provide any information on W’s earning capacity.  In 1992, W was able to earn about Can $800 per month as a clerk in Canada.  During the days of the Toy Factory, i.e. about 1995 to about 1998, she claimed her income was about RMB 3,000 to 4,000 per month. W did not start any legal proceedings in Hong Kong until 2002, and from 1994 to 2000, according to W, she only received less than RMB 70,000 as maintenance from H (i.e. roughly about RMB 10,000 a year, or about RMB 800 - 900 per month), and she was relying on her parents after the closing of the Toy Factory, and loans.  In W’s 1^st Affirmation in May 2003, she had said she was relying on her parents “and savings”.  She did not mention any loans in her 1^st Affirmation.  I am not sure where her savings came from, since according to her, at the time of the closing of the Toy Factory, there was not much left.  W only started to receive interim maintenance of HK$2,500 per month for the child as from 15 February 2004 onwards under an interim maintenance order which she consented to.  This continued until the Consent Order.  Thus, W appeared to be able to support herself and Y for all those years. 

118. Having considered the above, I am of the view that W should have earning capacity of at least RMB 5,000 or 6,000 per month, and I am satisfied that she has sufficient earning capacity/financial resources which, with the monthly maintenance from H, she should be able to support her own living expenses. 

(iv)  REASONABLE EXPENSES OF W AND Y

119. In W’s divorce petition issued on 24 December 2002, she prayed for interim maintenance of only HK$4,500 per month, being HK$3,000 per month for herself, and HK$1,500 per month for Y.

120. Further, in her divorce petition, she prayed for a lump sum of HK$790,000 for herself, and a lump sum of HK$290,000 for Y, When this Court asked her how she arrived at the lump sums, W’s reply was she could not recall.  Later, she then said she was worried that H would not keep up with the periodical payments, and therefore she was seeking a total lump sum of HK$1,080,000 as a once and for all settlement.  The sum of HK$1,080,000 was apparently arrived at by multiplying HK$4,500 per month by 240 months (i.e. 20 years), which means that W was capitalizing the amount of HK$4,500 per month which she was then seeking, and it appears she was content at that time for maintenance to be fixed at HK$4,500 per month.

121. About 5 months later, at end of May 2003, W filed her 1^st affirmation, which was in support of her then application for interim maintenance, setting out her expenses at that time to be RMB 4,500 per month at that time, being RMB 3,000 for herself, and RMB 1,500 for Y. 

122. As pointed out by H, it was W’s case that her parents were then paying for this sum of RMB 4,500, and yet such sum included an item for rent of RMB 1,500 and an item for utilities of RMB 100 to her parents.

123. H, however, said although he noticed this contradiction in what W was then saying, he did not query this at the time, and simply agreed to pay W HK$4,500 per month as interim maintenance, which was more or less what was sought by W at that time. 

124. Then, in October 2004, in W’s 3^rd affirmation, she produced an update of her expenses.  The address given by W in this affirmation was an address in Vancouver, and the affirmation was affirmed in Vancouver.  She explained that she had gone to live in Vancouver, without Y, and intended to find work there, and that she had intended Y to join her after she had settled down.  The updated expenses were based on her then “living expenses” in Vancouver, and amounted to about CAN 1,384 per month.  She said that Y’s expenses in Hangzhou were then the same as previously listed in her 1^st affirmation, but if and when he joined her, her expenses would increase to Can $1,896 per month, and Y’s would increase to Can HK$1,140 per month. 

125. By the time her 1^st Form E was filed, in April 2005, which was shortly before the Consent Order, she was suddenly back in Hangzhou.  She then provided another list of her then monthly expenses which consisted of HK$3,500 per month for “General Expenses” for her and Y, being HK$1,800 for rent and HK$400 for utilities, although the given address then was still that of the address of her parents, i.e. Joint Property.  Her then “Personal Expenses” was HK$1,700 per month, and Y’s expenses were then HK $3,790 per month.  The total was HK$8,990 per month.

126. Although W’s expenses were expressed in Hong Kong Dollars, they really ought to be in Renmenbi.  Anyway, according to H, this was his understanding, namely the total then expenses for W and Y in Hangzhou were about RMB 8,990.  H said at that time he did not really query the amount, although he again noticed that the amount included an item of rent for RMB 1,800 per month plus RMB 400 for utilities, notwithstanding the address given by W was still that of her parents’.  He said he then offered to pay W a total of HK$8,500 per month, being then roughly the equivalent of the amount in Renmenbi, and W accepted, and this resulted in the Consent Order.  W had said that she decided to accept a lower figure in the Consent Order due to H’s then liabilities, what she accepted, however, was not that much lower than what she was at that time claiming to be the monthly expenses of her and Y. 

127. In W’s 4^th affirmation filed in April 2007 in support of the present application, she gave a summary of her annual living expenses for her and Y, which was a total of RMB 243,800, i.e. about RMB 20,317 per month.  She further claimed that as Y broke his arm in an accident in December 2005, she had borrowed amounts from friends and relatives to cover his medical expenses, but W then said she had lost all receipts for Y’s medical treatment.  W had also she said she would need to incur a sum of HK$40,000 to cover the cost of Y’s future orthodontic treatment, but again there was no sufficient supporting documentary evidence as to when this would be required or the amount claimed.

128. Shortly before the trial, in February 2008, W filed her 2^nd Form E.  Her then monthly expenses in Hangzhou were:

General	HK$7,497.35, Including HK$3,797.50 for rent and HK$922.25 for utilities
W’s Personal	HK$6,363.05
Y’s	HK$10,529.84
Total	HK$24,410.24

Although W still gave the address of the Joint Property in this 2md Form E, she produced a unstamped tenancy agreement dated 18 August 2007, for a term of one year from 20 August 2007 to 19 August 2008 for a total rental of RMB 42,000 (i.e. RMB 3,500 per month) to show that she and Y had moved to a 72 sq m flat at Yen Zhi Lane (“1^st Flat”). 

129. During the 1^st Part of the trial, W had said that she moved out of her parents’ flat, i.e. the Joint Property, into the 1^st Flat in August 2005 to be nearer to Y’s school.  My understanding was that she meant moving to Y’s junior high school which he was about to enter that summer as in her 1^st Form E filed before the Consent order, Y’s transport fees to his school (he was then attending primary school) was stated to be $ 100 per month at that time and W had indicated in para 4.4 that it was likely to be increased to about HK$1,143 per month in July 2005.  However, in her 4^th Affirmation filed in April 2007 in support of the present application, when Y was attending junior high school, Y’s transport fees to school was given by her to be RMB 1,200.  Thus, there did not appear to be any saving in transport fees by her alleged move. 

130. At the commencement of the 2^nd Part of the trial, W suddenly told this Court she had moved back to her parent’s home with Y on about 19 May 2008.  Then towards end of June, she said she found another flat, and the rent was same as the previous rent, i.e. RMB 3,500 per month.  She then moved into this 2^nd flat in July 2008.  This time, W produced a notarized tenancy agreement P-10 of the 2^nd flat.

131. According to the figures given by W, her total monthly expenses for herself and Y were about RMB 4,500 at end of May 2003 (B1:11), HK$8,990 in April 2005 (B3:1073), about RMB20,317 in April 2007 (B3:1088), HK$24,400 per month in February 2008 (B3:1314), and RMB 30,367 (mistakenly typed as HK$30,367) in April 2009 (B7:2355).

132. As above mentioned, all such figures included an amount for rent.  In May 2003, the rent was RMB 1,500, although she was then still living in the Joint Property with her parents.  In April 2005, the rent was HK$1,800 per month, although again at that time, she was still residing in the Joint Property with her parents.  Although she said she moved out of the Joint Property with Y in August 2005, there were no other earlier tenancy agreements produced by her except the one commencing from August 2007.  Anyway, in April 2007, she claimed the rent was RMB 36,000 per annum, or RMB 3,000 per month, and in February 2008, the rent was HK$3,797.50 (the equivalent of RMB 3,500) per month, which has remained the same since, even though in July 2008, W said she moved to the 2^nd Flat.

133. As above mentioned, at the time of the Consent Order, the amount of rental given by her was a figure of RMB 1,800.  Under the Consent Order, W agreed to H paying HK$8,500 per month, and thus, excluding the rent, the expenses of W and Y were only about HK$6,700 per month at that time. Y’s direct expenses were about HK$3,790 per month and if assuming 50% of the General expenses at HK$1,700 per month, the total for Y’s expenses would be about HK$5,490 per month. 

134. As Y was to attend RQA which provided boarding for 6 months from August onwards, H’s solicitor Mr. Chung asked W during cross examination during the 2^nd Part of the trial why she could not have stayed on in the 1^st Flat or moved back to stay with her parents when she moved out of the 1^st Flat in May 2008, at least until when Y finished his tuition at RQA.  W’s answer was that she and Y had always been residing separately, as there was not enough room at her parent’s residence as her sister and her family moved in. 

135. W’s explanation at that time was as her sister’s residence was in the old town which was being developed, her sister and her husband and their son moved to her parents’ home.  It is H’s case that W was not telling the truth. H’s investigations have now revealed W’s sister and her husband are the registered owners of another property in the same compound as the Joint Property, which was apparently purchased by them in September 2003.  Further, H had produced evidence alleging that W’s mother is also the registered owner of another property in Yuhang which appeared to be acquired on 9 June 2004, and that on the purchase document, W’s mother had given her address at Hing On Li, Hangzhou.  This was apparently W’s parents’ old address and what H was alleging was that W’s parents could still be residing in their old property.  According to W, the property at Hing On Li was a “welfare” property assigned to her father when he was a government official, and that the property had already been repossessed by the Government.  According to W, the property in Yuhang was not owned by her mother solely and was a property her mother held on behalf of her siblings when their original home inherited by them was demolished.  Anyway, I am satisfied that there is no sufficient evidence to say that W’s parents are still residing in their old property or have not been residing in the Joint Property. 

136. Mr. Chung has pointed out at that time to W even if her sister had moved into the Joint Property with her husband and their son, this was clearly only a temporary arrangement since W’s sister would receive compensation or would be offered alternative accommodation by the authorities.  W in the end admitted that the arrangement was not permanent and her younger sister was looking for a new flat. 

137. Although W’s above reasons for moving out of the Joint Property allegedly in August 2005 or not moving back to the Joint Property in May 2008 did not appear to be convincing, I do not, however, do not think it is unreasonable for her to wish to live separately with Y from her parents.  However, I accept the exact date as to when she moved out of the Joint Property was not quite clear. 

138. In April this year, W filed her 3^rd Form E.  She is still residing with Y at the 2^nd Flat, for which the rent is RMB 3,500 per month.  The other household expenses amount to about RMB 2,900 per month.  W said her “personal” expenses are about RMB 4,050 per month, and Y’s expenses are about RMB 6,000 per month, excluding tuition fees.  On average, Y’s tuition expenses are another RMB 14,000 per month. 

139. H had clearly accepted W’s expenses as being approximately HK$8,990 per month at the time of the Consent Order by offering to pay her HK$8,500 at the time.  He was further aware that the amount included an item for rent of HK$1,800 per month.

140. As in the case of HCTT v TYYC, the Consent Order is not a complicated one.  Both parties were legally represented throughout the divorce proceedings, and up until the time the Consent Order was reached, and they have continue to be legally represented. There has been no application to set aside the Consent Order.  Even though this Court has an unfettered discretion to deal with the situation as it is when the matter comes before it, this does not mean that the earlier order carries no weight. 

141. There were the 2 tenancy agreements, one for the 1^st Flat commencing from August 2007, and one for the 2^nd Flat commencing from July 2008.  There were two electricity bills produced by W of the 1^st Flat, one dated 4 December 2007 of about RMB 500 and the other one dated 2 February 2008 of about RMB 1,100.  It seems the electricity costs average about RMB 250 per month or RMB 550 per month for winter.  W had also produced a bundle of medical records in support of her medical expenses.  Apart from these, W has produced very few documentary evidence in relation to her and Y’s expenses.  I can thus only take a broad brush approach.

142. According to her recent 3^rd Form E, assuming her share being half of those expenses under para 4.1 “General”, this plus her “Personal “expenses under para 4.2 would on her figures come to about RMB 7,250 per month.  I have already said I am of the view that W has earning capacity of at least RMB 5,000 to 6,000 per month. At present, the exchange rate is approximately HK$100 to RMB 88.  Thus HK$3,500 would convert to about RMB 3,080.  With this amount from H, W should have no problem in maintaining herself. 

143. As for Y, in June 2005, the amount of maintenance agreed was HK$5,000 per month, which included a share of the expenses under “General” which was at that about HK$3,500 per month in total.  In H’s solicitors’ letter of 25 July 2008 (P-16), they seemed to be suggesting a total sum of HK$2,000 per month for such expenses “General”, excluding rent.  At present the rent is RMB 3,500 per month, compared to RMB 1,800 per month in June 2005.  The other expenses under “General” were HK$1,700 or roughly RMB 1,700 in June 2005.  The CPI increase for December 2006 was 2.8%, for 2007 was 7.7% (agreed by H during the 2^nd part of the trial) and for January 2008 was about 7.1%.  Taking a broad brush approach, and the CPI index since June 2005, I think a sum of RMB 2,000 per month for the other expenses under “General” in Part 4.1 would be reasonable, bearing in mind that Y’s lunch and pocket money had increased from about RMB 300 per month in June 2005 to RMB 600 per month, and thus the increase for his general food and other expenses at home might not be so much.  The total under “General” would come to RMB 5,500, inclusive of rent and Y’s share, if roughly at 50% would be about RMB 2,750 per month.

144. At the time of the Consent Order, Y’s direct expenses, excluding tuition fees, were HK$3,040 per month or about RMB 3,200 per month.  Now in the 3^rd Form E, Y’s direct expenses under paragraph 4.3 are RMB 5,250, excluding tuition and school transportation.  The difficulty I have is that W has not provided any sufficient supporting documentary evidence.  In P-16, it was H’s case that such direct expenses would come to only about RMB 2,103, excluding tuition and school transportation.  This is far too low, since at the time of the Consent Order, H had already accepted a higher figure.  At the time of the Consent Order, Y was 11½, in February 2008, at the time of the 2^nd Form E, Y was 14, and now he is about 15½. One of the largest item of Y’s expenses is the increase in his medical/dental expenses from HK $200 in April 2005 to now RMB 1,000 per month. This is probably because W has included Y’s orthodontic treatment.  Such is a one-off expense and as I have said earlier there is no sufficient supporting evidence as to when Y requires such treatment and the cost thereof. There is also no sufficient supporting evidence as to why Y’s extra tuition expenses are RMB 1,800 per month. 

145. Adopt a broad brush approach, I am of the view that Y’s direct expenses, excluding tuition and school transportation, could be covered by a monthly sum of RMB 4,000.

146. Thus, for Y, his reasonable expenses would be RMB 6,750 per month in addition to his tuition expenses and school transportation expenses. Y’s tuition fees are RMB 167,000 per annum plus school bus fees of another RMB 9,000 per annum (B7:2378A).  These add up to an average of another RMB 14,337 per month. The total payments for Y would be an average of RMB 21,000 per month.

(v)  H’S FINANCIAL CIRCUMSTANCES AND ABILITY TO PAY

147. H is now the Division Head of Internal Audit for a local bank, and has been in this position for about 7 years.  There has been no change since the Consent Order.

148. H’s basic salary at the time of the Consent Order was HK$89,000 per month.  At the end of December of each year, he receives an extra month’s pay, and in March each year, there is a discretionary bonus. Inclusive of his double pay and annual bonus, at the time of the Consent Order, his total income was about HK124,833 per month. For March 2007, the discretionary bonus was about HK$720,000 and thus at the time of H’s 2^nd Form E, filed in February 2008, his total average income was about HK$197,200 per month. For March 2008, the amount of the discretionary bonus he received was about the same for 2007, namely HK$720,000 (B5:1933).  Unfortunately for March 2009, according to his 3^rd Form E, H received no bonus due to the economic downturn. At present, his basic salary is HK$127,200 per month, and including his double pay, his total average salary is now only HK$137,800 per month.

149. At the time of the Consent Order, as seen in his 1^st Form E, he only had cash of about HK$7,000 per month, and a pension of about HK$95,000, but he had liabilities of HK$2.427m.  This gave him negative equity of HK$2.324m in April 2005.  This, however, included a sum of HK$1m due to Mr. Tse, of which it seems now Mr. Tse is unlikely to demand payment.  H gave his monthly expenses to be HK112,000, which included a sum of about HK$76,500 for loan repayments, and tax of HK$22,000 per month.  Thus, it would seem his expenses were about HK$13,500 only, but there appeared to be double counting since his tax would be paid by his tax loan.  His rent at that time was only HK$2,500 per month, although he indicated that he would be renting a new flat in about June 2005, which would cost about HK$7,000 per month.  He was not divorced at that time and therefore had not yet remarried then. 

150. As at the time of his 2^nd Form E filed in February last year, his assets consisted of:

Cash	HK$13,170
Insurance Policies	HK$280,000
MPF	HK$880,000
His then liabilities were    HK$795,698, and his net assets were about HK$377,500.

151. H’s monthly expenses in his 2^nd Form E were listed to be HK$192,715, including rent of HK$9,000, tax of HK$29,500, loan repayment of about HK$82,000, and also $21,800 for dependants and MPF.  By that time, he has remarried.

152. By the time of the 2^nd Part of the trial, when he gave oral evidence, it would appear that his expenses had by then reduced to be about HK$171,595 per month. 

153. H filed his 3^rd Form E in April this year.  He disclosed the following assets:

Cash	HK$62,600
Insurance Policies	HK$144,819
MPF	HK$596,061
His liabilities were HK$938,754, and he had negative equity of HK$135,274.

154. As mentioned above, he has received no bonus this March.

155. According to his 3^rd Form E, his total monthly expenses are now about HK$149,000 as follows:

General :
	HK$
Rent	11,000
Utilities	1,200
Food	3,000
Household expenses	500
Insurance premia	35,028
Personal:
Meals out of home	3,000
Transport	1,600
Clothes/shoes	1,000
Personal Grooming	500
Entertainment/Presents	1,200
Holidays	1,800
Medical/Dental	600
Maintenance to W and Y	8,500
Loan Repayments	55,092
Contribution to parents-in-law	2,000
Contribution to wife	23,000
Total:	149,020
Deficit	(-11,220)

156. According to credit reports produced by H, he has always had the practice of borrowing loans, but if one looks at his bank accounts, he has, however, remained financially sound.

157. If one looks at H’s bank account at Dah Sing bank, his recent monthly balances were:

31.07.08	HK$105,277.41
30.08.08	61,539.81
30.09.08	35,082.91
31.10.08	53,270.03
29.11.08	118,266.15
31.12.08	140,944.18
31.01.09	57,152.00
31.02.09	116,439.37
31.03.09	41,200.49

158. In his HSBC Premier account, there was a net balance of about HK$48,588 as at end of March 2009.

159. At the time of the Consent Order, he had monthly loan repayments of about HK$76,500 per month.  Now such repayments are only HK$55,000 per month.  At the time of the Consent Order, his basic salary was only HK$89,000 per month, excluding his double pay and bonuses, whereas now it is HK$127,200 per month, i.e. an increase of HK$38,200 per month, or about 43% increase, and his liabilities are now HK$21,434 less. For the intervening years, i.e. in March 2006, March 2007, and March 2008 he had received in total some considerable amounts of bonuses of HK$1.5m or more, but he chose not to pay off his liabilities/loans.  At the time of the Consent Order, his rent was HK$2,500 per month, and now his rent in Hong Kong is HK$11,000 per month.  He had not remarried at that time.  H says his monthly payments to or on his wife’s behalf, including the mortgage payments he is paying in her behalf, are now HK$23,000 per month, and he pays another HK$2,000 to her parents.  Further, according to para 5.6 of H’s 3^rd Form E, his wife retired in March 2007.  I am not satisfied that his wife has no earning capacity, and I am of the view that his payments to his wife are on the high side, and can be reduced.

160. Of his monthly loan repayment of HK$55,000 per month, HK$25,583 was for his tax loan.  Recently, he has sought an extension of time to pay his taxes. As he has not received a bonus this year, his tax liability is likely to be reduced.  Anyway, out of HK$55,092, apart from his tax loan, his other loan repayments amount to about HK$29,509. Of his loans, the line of credit or overdraft facility of HK$150,000 with China Construction Bank was obtained on 17 March 2008, and a personal loan of HK$192,850 was obtained from the same bank on 22 July 2008.  Borrowing funds clearly appears to be H’s way of conducting his financial affairs. 

161. If one looks at H’s revolving credit with Bank of China (obtained in November 1997), his outstanding liabilities with the American Express and Dah Sing credit cards, he has maintained more or less the outstanding balances (namely just below the respective maximum credit limits) for some time, and each month, he just paid the minimum, and then he would then withdraw/use the facilities again.  This is the same with his line of credit with China Construction Bank.  In October 2008, he deposited HK$5,500, and the outstanding balance was then about HK$101,380 and then within 2 days thereafter withdrew cash of a total of HK$40,000, resulting in an outstanding balance of about HK$141,380.  If one looks at it on a broad brush basis, after paying for his rent of HK$11,000 per month, his insurance payments of HK$35,000 per month (for his savings/future), his current tax loan repayments of about HK$25,583, and the monthly instalment repayments of the two personal loans totalling HK$10,509, on his present income, he still should have about HK$55,700 available for his use every month (HK$137,500 less $11,000, $35,000, $25,583, and $10,509). In addition, he has an ability to borrow, which is part of his financial resources. At the time of the Consent Order, with a lower income, he was able to borrow to the extent that his monthly repayments were at least HK$20,000 more than the present. Thus, I believe he will have no difficulty to borrow more to pay for Y’s tuition fees and school transportation and related expenses.  Further, I believe he may also be able to extend the repayment period of his personal loans.  Afterall, at the 1^st Part of the trial, H did agree to pay for Y’s tuition and related expenses at HIS.  Furthermore, W almost had to be single-handedly brought up Y, with little contribution from H until the interim maintenance order.

162. At the time of the Consent Order, for 2005, H received an average of HK$28,333 per month as his bonus, in addition to his 13^th month salary.  As I have said that since the Consent Order, until this year, he had received considerable bonuses.  I accept that that 2008/2009 was a economically very bad year for banks generally, but H has a stable job, and with gradual recovery in economy, there is no reason to believe that there will not be any more bonuses in future. 

163. Having considered all the circumstances, I am of the view that H has the ability to pay the amounts ordered.

CONCLUSION

164. I am satisfied that in the present case, there are changes in the circumstances which justify an increase in the maintenance payments for Y.  Having considered the circumstances of this case, I am satisfied that it is fair that H should pay for Y’s education expenses.  There will be no need for reimbursement by W for the tuition fees at RQA or at HIS already paid by H.  The total payments for Y will amount to about RMB 21,000 per month, including his tuition and school related expenses at HIS.  I have already said I am of the view that H has the ability to pay this sum, in addition to the payments to W.

165. If H is willing to provide an undertaking to pay Y’s tuition expenses and school bus and related expenses direct to the HIS, then the monthly payments for Y will be RMB 6,750 per month.

166. Payments for W will remain at HK$3,500 per month.

BACKDATING

167. There is no dispute as to the Court’s power to backdate any order of variation (see Rayden 18 Ed para.18.25).  Whether to backdate or not depends on the circumstances of each case.

168. W has sought an order that the payments should be backdated to the date of 24 April 2008.

169. H has paid the tuition fees of RQA from August 2008 to January 2009, which included Y’s food and boarding.  However, at the same time, H has continued to pay the monthly sum of HK$8,500 per month.  Thus, for those 6 months, W should have a surplus.  Even if there was a shortfall between April to August 2008, and from February 2009 to May 2009, this would have been off set by such surplus.  Thus, having considered the circumstances of this case, I will not backdate the payments. 

ORDER

170. My order is therefore:

(i)    The Respondent shall continue to pay the Petitioner a sum of HK$3,500 per month, or the equivalent in RMB for her maintenance, payable on the 1^st day of each month, and to continue during parties’ joint lives or until W’s remarriage, whichever shall be earlier.  The Petitioner’s application for variation in respect of paragraph 2 of 9 June 2005 is dismissed. 

(ii)    Upon the Respondent’s undertaking to pay direct to Hangzhou International School the tuition fees, school transportation and other related expenses for the child of the family while the child is attending the said school, the Respondent shall pay to the Petitioner, for the maintenance of the child, a sum of RMB 6,750 per month, as from 1 June 2009, payable on the 1^st day of each month, and to continue until the child reaches 18 or completes full time education, whichever shall be later. 

COSTS

171. I have found that the Petitioner has not made full and frank disclosure in relation to the Ningbo Company, the Toy Factory, and her financial situation and/or financial resources.  I did not accept her alleged loans, and I have further found that she has earning capacity.  She did not succeed in her application for an increase in her part of the maintenance.  Thus, even though she has succeeded overall in claiming an increase in the child’s part of the maintenance and for his tuition fees, in my view a fair order would be there be no order as to costs of and incidental to the Petitioner’s application, including all costs reserved.  This is an order nisi, which will be made final after 21 days.