CCMJ v. SSM (formerly known as SKL)

CACV 84/2021

[2022] HKCA 173

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 84 OF 2021

(ON APPEAL FROM HCMP NO. 929 OF 2017)

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J U D G M E N T

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Hon Cheung JA (giving the Judgment of the Court) :

I.  The application

1.  This is an application by the defendant mother (‘the Mother’) for an order that the appeal lodged by the plaintiff father (‘the Father’) be stayed until the Father has complied with two court orders made in FCMP 67/2010.

2.  The Father now appears in person but he has the benefit of having the written submission prepared by his former counsel lodged in opposition to the present application.

II.  Background

3.  The parties are not married but had a relationship, during which a child (‘N’) was born in November 2008. N is now 12 years old. She has been a ward of the Court since 20 April 2017. The parties separated in May 2009 when the Mother left home with N who was then six months old.

4.  On 5 October 2012, after a lengthy contested hearing, the Family Court granted sole custody, care and control to the Mother with general access to the Father (‘the custody order’). N was then four years old.

5.  Since the making of the custody order there had been numerous applications by the parties concerning N’s wardship, custody, care and control and access arrangement.

6.  In October 2020, B Chu J was seized with two further applications by the parties, namely, the Father’s application for custody, care and control of N and the Mother’s application for variation of the access arrangement. After a lengthy hearing, B Chu J on 3 February 2021 dismissed the Father’s application. She ordered the parties, with the assistance of the Official Solicitor, to agree to an access arrangement for her approval. Pending this agreement, the existing access arrangement with slight modifications will continue to apply.

7.  The Father lodged his notice of appeal against this judgment on 3 March 2021 and issued a summons to adduce fresh evidence for the appeal.

III.  The relevant orders

8.  The two orders that the Mother now seeks the Court to require the Father to comply with before he is to be allowed to proceed with his appeal are :

1)  an order dated 12 June 2014 made by Deputy District Court Judge G.Own (as he then was) (‘Judge Own’) whereby the Father undertook that :

(1)  He shall pay for all N’s school fees, school bus, school uniform, school books and stationery so long as they are reasonable and deemed necessary by the school, with school books and stationery to be initially paid by the Mother in respect of which she will be repaid on a reimbursement basis within 14 days from her production of receipts; and

(2)  He shall bear all reasonable costs of extra-curricular activities arranged by the Mother provided that the total costs of such activities shall not exceed $4,000 per month, such costs to be initially paid by the Mother in respect of which she will be repaid on a reimbursement basis within 14 days from her production of receipts (‘the Undertaking’).

2)  an order dated 5 June 2015 of Judge Own whereby it was ordered, inter alia, that :

(1)  The Father do pay N’s maintenance at the rate of $13,726 per month on or before the first day of each month until N reaches the age of 18 or ceases full time education, whichever is the later ([3]);

(2)  The Father do pay carer’s allowance to the Mother at the rate of $10,000 a month until further order ([5]); and

(3)  Extra-curricular activities expenses for N arranged by the Mother in excess of $4,000 are to be equally shared by the Father and the Mother ([8]) (‘the Maintenance Order’).

9.  The Father failed to comply with these two orders. He did not pay the maintenance for N, the carer’s allowance for the Mother and the school and extra-curricular activities (‘ECA’) expenses.

10.  In respect of N’s maintenance and the Mother’s carer’s allowance, the Father does not dispute his liability to pay these sums but claimed that he is unable to pay them.

11.  The Father started to delay payment of the school-related and ECA expenses in January 2017 and eventually stopped paying them from October 2018 onwards. He has paid nothing since October 2018. From that moment to 18 March 2020, the Father has failed to pay the school-related and ECA expenses in the sum of $181,773.90 (excluding interest).

12.  On 19 May 2020, the Mother obtained a garnishee order nisi for that sum (‘the 1^st garnishee application’). On 28 September 2020, the Father paid $22,000 out of the $181,773.90 being the amount uncontested by him according to his own calculations. The sum of $22,000 was paid by the Father as a condition to set aside the 1^st garnishee order nisi dated 19 May 2020. This reduced the outstanding amount up to 18 March 2020 to $159,773.90. That sum remains outstanding.

13.  From 19 March 2020 to 13 October 2020, the Father failed to pay the school-related and ECA expenses in the additional sum of $34,433.10 (excluding interest).

14.  Since July 2020, the Father has stopped paying N’s maintenance and the Mother’s carer’s allowance. The Father paid $41,178 on 18 and 19 October 2020. They represented N’s maintenance for July, August and September 2020. These two sums were paid by the Father immediately before the hearing before B Chu J on 20 October 2020.

15.  On 17 November 2020, the Mother obtained a garnishee order to show cause against HSBC and the Bank of China (‘BOC’) (‘the 2^nd garnishee application’). The application is to attach the money of the Father in the bank accounts to answer the $289,111 then due to be paid by the Father under the two orders. It came before Judge Own in October 2021 and the decision is being reserved.

16.  The amount outstanding from the Father in July 2021 when Mr.Surman and Ms Pao for the Mother lodged their written submission in support of the present application was :

	Description	Amount
1.	Sum covered under the 2nd garnishee proceedings (up to 13 October 2020, exclusive of interest)	$247,933
2.	Further sum for N’s maintenance ($13,726 per month) and the Mother’s carer’s allowance ($10,000 per month) from November 2020 to July 2021 (nine months in total) (exclusive of interest)	$213,534
3.	Further Expenses incurred for N since 14 October 2020 (exclusive of interest)	(to be calculated) ____________________
	Total	$461,467+

17.  A breakdown of $247,933 in Item 1 of [16] is as follows :

	Description	Amount
1.	School-related and ECA expenses under the 1st garnishee application (up to 18 March 2020, exclusive of interest)	$159,773.90
2.	School-related and ECA expenses (from 19 March 2020 to 13 October 2020, exclusive of interest)	$34,433.10
3.	N’s maintenance (for October 2020 [one month], exclusive of interest)	$13,726.00
4.	Mother’s carer’s allowance (for July, August, September and October 2020 [four months], exclusive of interest)	$40,000.00 ____________________
	Total	$247,933.00

18.  Mr. Surman informed the Court that the total amount outstanding at the date of this hearing on 19 January 2022 is $603,823 which includes the sum of $461,467 in [16] and the additional sum of $189,808 which is N’s maintenance and the Mother’s carer’s allowance for eight months from June 2021 to January 2022. It seems there is a miscalculation of the sum of $189,808. According to [16] Item 2, the arrears of N’s maintenance and the Mother’s carer’s allowance are calculated to July 2021 already. Hence, the correct figure should be six months from August 2021 to January 2022 at $142,356. The total outstanding amount of $603,823 is, however, correct.

IV.  The Hadkinson order

19.  The order now sought by the Mother is known as the Hadkinson order which has its origin from the case of Hadkinson v. Hadkinson [1952] p.285 where Denning LJ at 298 held :

‘ ...It is a strong thing for a court to refuse to hear a party to a cause and it is only to be justified by grave considerations of public policy. It is a step which a court will only take when the contempt itself impedes the course of justice and there is no other effective means of securing his compliance. ...... I am of opinion that the fact that a party to a cause has disobeyed an order of the court is not of itself a bar to his being heard, but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed.’

20.  Sir John Balcombe observed in Baker v.Baker (No 2) [1997] 1 FLR 148 at 151 that Denning LJ’s approach now represents the modern practice as appears from the speeches of Lord Bridge of Harwich and Lord Oliver of Aylmerton in X Ltd v. Morgan-Grampian (Publishers) Ltd and Others [1991] 1 at 46-47 and 50-51 respectively.

21.  More recently in Anne Orenga de Gafforj v. Henri Orenga de Gafforj [2018] EWCA Civ 2070 (Appeal: Hadkinson Order) ‘de Gafforj’, Peter Jackson LJ of the English Court of Appeal summarised the nature of Hadkinson order as follows :

‘ 9. The nature of the Hadkinson order was described in this way by Sir Ernest Ryder in Assoun v Assoun [No 1] [2017] EWCA Civ 21 at [3]:

“Such an order is draconian in its effect because it goes directly to a litigant’s right of access to a court. It is not and should not be a commonplace. As developed in case law, it is a case management order of last resort in substantive proceedings (for example for a financial remedy order) where a litigant is in wilful contempt rather than a species of penalty or remedy in committal proceedings for contempt.”

To this I would add that it is not a species of what has been described in one of the cases as ‘enforcement by the back door’.

10. An order of this kind can be made at any stage of proceedings, both at first instance and on appeal. ...’

22.  It is of note that Ryder J in Mubarak v Mubarik [2004] 2 FLR 932 held that the Hadkinson order does not infringe a person’s right of access to a court under Article 6 of the European Convention on Human Rights and Fundamental Freedoms. He stated :

‘ [51] ... I do not believe that Hadkinson conditions impair the very essence of the right to a fair trial provided the conditions imposed are proportionate and in pursuit of a legitimate aim (following Ashingdane v United Kingdom (1985) 7 EHRR 528, at para 57). The right of access to a court is not unfettered for all purposes.’

23.  Article 35 of our Basic Law guarantees the right of access to court. We are also of the view that the Hadkinson order does not infringe Article 35 if the conditions imposed are proportionate and in pursuit of a legitimate aim.

24.  This Court in CWG v MH [2014] 4 HKLRD 141 following Mubarak v Mubarik (No 2) [2007] 1 WLR 271 stated that the relevant questions to be asked in a Hadkinson application are :

‘1) Is the [respondent to the application] in contempt?

2) Is there an impediment to the course of justice?

3) Is there any other effective means of securing compliance with the Court’s orders?

4) Should the Court exercise its discretion to impose conditions having regard to the question?

5) Is the contempt wilful (is it contumacious and continuing)?

6) Is so, what conditions would be proportionate?

The standard of proof is the civil standard: Mubarak v Mubarik (No 2) [2007] 1 WLR 271, 286, [72].’

25.  In respect of Condition 5 above, the reference to the contempt being contumacious has found not to be helpful by other recent decisions. In Laing v Laing [2005] EWHC 3152 (Fam), Sir M Potter P stated :

‘ [24] In the Hadkinson context, I do not regard the word ‘contumacious’ as a useful addition or supplement to the threshold requirement that the contempt should be wilful in the sense of a voluntary, deliberate, knowing (and continuing) breach, by a person well able to comply with the order if he or she chose to do so. Once that threshold is established, then, in deciding whether and to what extent to fetter the right of the applicant to proceed with an application for variation or relief by imposition of conditions, it will be relevant for the court to take into account the level of defiance displayed, as well as its effects, without resort to the problems of definition presented by use of the epithet ‘contumacious’.’

26.  This approach is adopted in decisions such as C v C (Appeal: Hadkinson Order) [2011] 1 FLR 434 at [29].

27.  In the light of the subsequent case law development, we would prefer to adopt the formulation of the conditions for a Hadkinson order in de Gafforj at [11] which omitted the reference to contumacious breach :

1)  The respondent to the application is in contempt.

2)  The contempt is deliberate and continuing.

3)  As a result, there is an impediment to the course of justice.

4)  There is no other realistic and effective remedy.

5)  The order is proportionate to the problem and goes no further than necessary to remedy it.

1)  Conditions 1 and 2

28.  It is clear from Mubarak (No 2) that non-payment in breach of a maintenance order is in itself a contempt of court, regardless of ability to pay, and that questions of ability to pay come into play when the Court decides whether and how to act on the contempt. Bodey J held :

‘ 65. From all of the above, I conclude that non-payment in breach of a matrimonial order to pay money is in itself a contempt of court. There is, in my judgment, no requirement that it should be shown to have been culpable, ie that the non-paying party had the means to pay....

66. In my judgment, therefore, questions of culpability come into play as regards the court’s exercising its discretion as to whether and how to act on the contempt so established. At that stage all the circumstances are considered. Crucial, if not decisive, will be whether the non-paying party could have paid if he had wanted to.’

29.  Bodey J’s approach was expressly adopted by Peter Jackson LJ in de Gafforj at [12].

2)  Condition 3

30.  In respect of impediment to the course of justice, Sir John Balcombe in Baker (No 2) at 154 disagreed with the husband’s submission that his failure to pay the lump sum ordered did not impede the course of justice. He held :

‘ In my judgment, it does ... There have been innumerable applications. The position is that the costs have risen out of all proportion to the money at stake. The wife still has not had her lump sum and not had all that is due to her under the periodical payments order.’

31.  In Laing v Laing [2007] 2 FLR 204, Sir M Potter J held :

‘ [18] It is clear from the judgment of Ryder J in Mubarak that previous decisions - or, at any rate, such decisions as have been reported - in which the court has by application of the Hadkinson principle imposed conditions as to the continuance of an application for the benefit of the party in contempt, the court has been concerned with very large outstanding sums and particularly blatant examples of contempt by the party applying for relief or variation. However, that does not mean that the jurisdiction is limited to such cases. The touchstone and the power of the court to refuse to hear a party on which the power to impose conditions of continuance is founded, is (as already stated) whether the conduct amounting to a contempt, in this case the failure to pay under the existing order (see Leavis v Leavis), is such that, so long as it continues, it impedes the course of justice in the cause by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make. That was accepted and restated in Baker v Baker (No 2) [1997] 1 FLR 148 and confirmed in Mubarak. It is not a principle that depends on the size of the sums involved but upon the relevant situation of the parties, the circumstances of the non-payment and the effect of such non-payment on the course of justice in the particular case.’

32.  Peter Jackson LJ at de Gafforj stated :

‘ [13] As to the third condition, it is not necessary to limit by further definition what it means to impede the course of justice, but it is likely to include what Sir Mark Potter P described in Laing v Laing [2005] EWHC (Fam) at [18] as ‘making it more difficult for the court to ascertain the truth or to enforce the orders it makes.’

3)  Condition 4

33.  Bodey J in Mubarak (No 2) stated :

‘ [52] Any Hadkinson application needs to be approached with circumspection since, whilst the concept may, of course, be justified to meet the needs of a particular case, there is always the risk that it will not succeed and will be a mere distraction. Such an order is a remedy of last resort, for use where the circumstances are such that adequate justice cannot be done to the aggrieved party whilst the defaulter remains in breach. Hence one particular factor to be taken into consideration is whether or not there is any other way to secure effective compliance with the order concerned. Even where there is not, there will be some circumstances in which the defaulter has to be permitted to challenge the very order in respect of which he or she is breach.’

34.  Peter Jackson LJ in de Gafforj stated:

‘ [14] The fourth condition underscores the obvious point that a Hadkinson order will not be made if the court has other powers that can be effectively deployed.’

4)  Condition 5

35.  Peter Jackson LJ in de Gafforj addressed the issue of proportionality in making a Hadkinson order :

‘ [15] Lastly, a Hadkinson order is a flexible one with a range of possible sanctions. In C v C the court required a lump sum to be brought onshore as a condition for an appeal continuing, failing which it was to be dismissed. In Mubarak, the husband was required to give instructions to trustees and to make legal services payments if he was to continue to be heard in financial remedy proceedings. In Laing, the husband was required to make good arrears of maintenance before his application to vary was heard. In Hadkinson itself, the Court of Appeal refused to hear a mother’s appeal until she had returned a child to England. The form of order will be tailored to the needs of the case. What is important is that the sanction is no stronger than it need be to remove the impediment to justice.’

V.  Determination

36.  Applying these principles to the present case, we are of the view that a Hadkinson order should be granted.

1)  Father in contempt/Deliberate and continuing breach

37.  The Father is in breach of the two orders by which he either undertook or was required to pay the specified sums. He has only made partial payments. His conduct is a cynical disregard of his obligations under the two orders. Plainly, he is in contempt and the contempt is deliberate and continuing. He said he is not liable to pay the ECA expenses sought by the Mother but there is no defence to his liability to pay N’s maintenance and the Mother’s carer’s allowance. He had not disputed that he is so liable and had, in fact, admitted at this hearing that he is liable.

38.  On 3 July 2015, the Father sought leave to appeal against the order in respect of N’s maintenance and the Mother’s carer’s allowance. The application for leave was dismissed on 12 August 2015 with costs. On 26 August 2015, the Father further sought leave to appeal against the two orders in HCMP 2059/2015. That application was dismissed with indemnity costs on 2 December 2015. Earlier on, before the decision was handed down on 2 December 2015, the Father had, on 3 November 2015, applied to discharge or modify the Undertakings. That application was dismissed with costs on 26 January 2016.

39.  The Father said he was unable to pay the money. This is clearly not justified. He had until recently, for this application, instructed a team of lawyers which included an experienced specialist counsel and junior counsel. Judge Own in his decision of 23 September 2020 also referred to the names of prominent senior counsel that the Father had previously instructed in the proceedings between the parties. The Father said he has to rely on borrowing from friends and relatives to finance his litigation but the loans which according to the calculation by the Mother amounted to $5.8 million were apparently advanced to him without any security. The Mother stated, according to the Father’s own evidence, since 1 October 2020, when he ceased to pay N’s maintenance and the Mother’s carer’s allowance altogether, he had borrowed $1.9 million, from which he paid $300,000 to his solicitors, on 1 March 2021. This is to be compared with the total outstanding sum for N’s maintenance and the Mother’s carer’s allowance as of that date which was only $172,356 (excluding interest). This belies his claim that he is concerned with the well-being of N and has to instruct prominent lawyers to fight for her. This is another example of someone who stopped the payment for reason of parsimony rather than principle. Further, it is clear that the Father has the capacity to borrow to finance his expenses. As Bodey J observed in Mubarak (No 2) :

‘ [77] This borrowing capacity has been and is clearly a resource which, or some of which, could have been used in reduction of his financial obligations to the wife, instead of being used on this titanic and wasteful litigation.’

40.  The Father claims that the Mother’s 2^nd garnishee application had caused his accounts to be frozen thus preventing him to comply with the two orders. But there was no explanation why he had stopped payment even before that application. The Mother in her 2^nd affidavit filed in the present application further referred to the problematic feature of the Father’s case :

‘ Moreover, the evidence produced in “CCMJ-6” is not without problems. To name a few, the cheques dated 24 May 2020 and 19 November 2020, in the sum of HKD1.6 million in total, are crossed cheques instead of bearer cheques. As I understand, crossed cheques cannot be cashed at a bank counter but must be paid into an account of the payee. If it is the Plaintiff’s case that all his bank accounts have been frozen, then how is he supposed to utilize these loans? The Plaintiff does not appear to have mentioned any difficulty in making use of these loans in his 2^nd Affidavit.’

41.  Further, as Mr.Surman submitted, the Father’s claim is putting the cart before the horse. Had the Father been willing to comply with the orders without the need for the Court’s intervention, the Mother would not have to resort to such lengths and incur further and unnecessary legal costs.

2)  Impediment to justice

42.  It is clear from the recent authorities that the power of the Court to refuse to hear a party unless he complies with the conditions imposed is based on whether the conduct amounts to a contempt which impedes the course of justice by making it more difficult for the Court to ascertain the truth or to enforce the orders it may make.

43.  In our view, the Father’s breach to pay under the two orders impedes the course of justice. The history of this case shows the difficulty in enforcing the two orders which the Father has chosen to ignore. Although the Mother is legally aided, she requires the maintenance and allowance for N and herself. The Father has no defence to the payment of these sums. We agree with Mr.Surman that the Father’s non‑payment has a very considerable and detrimental impact on N – her education and her general well‑being and it obstructs the exercise of the Court’s quasi‑parental powers over N who is a ward of the Court. The Father has a moral and legal obligation to discharge his obligations. Further, the costs incurred in these proceedings are totally out of proportion to the money at stake. The historical context of this case is pertinent. As B Chu J observed :

‘ As of todate, there have been no less than 16 published judgments/decisions handed down by Judge Own in the Family Court (“Judge”), 7 judgments/decisions in the Court of Appeal on leave to appeal applications/interlocutory appeals and 9 judgments/decisions in these wardship proceedings. Further there have been no less than 18 social welfare reports (referred to individually as “SWR”), 3 reports from the Official Solicitor as guardian ad litem for N (referred to individually as “OS Report”).’

3)  Last resort

44.  We agree with Mr. Surman that there are no other effective means to secure compliance other than the order now sought by the Mother. The Mother issued her 1^st garnishee application on 19 March 2020 and was only able to receive $22,000. The result of the Mother’s 2^nd garnishee application is still pending. In our view, the outcome of the 2^nd garnishee application will have little, if any, impact on the present application in respect of the Father’s obligation under the Maintenance Order. The Father informed this Court that the BOC account has about $300,000 and the HSBC account has $50,000 which is less than the sum of $603,823 now due from him. Even if, for the purpose of argument, $194,207 (i.e.$159,773.90 and $34,433.10) which represent ECA expenses are to be excluded from $603,823, the outstanding sum is $409,616 which is more than the $350,000 now in the two accounts. But what is more important is that the BOC account is the account where the Father pays the monthly mortgage instalments of between $14,000 and $15,000 for the property now occupied by the Mother and N. The arrears of instalments due to BOC, according to the Father, was about $140,000 and the balance of the mortgage loan is $1.2 million. BOC has since obtained an order for possession against the property by reason of the Father’s default in paying the instalments. As the mortgagee bank, BOC is likely to have priority over the $300,000 now in this account. The money there is unlikely to have any real benefit to N and the Mother. The Father said that the Mother can apply to be joined in the mortgagee action and get what is due to her from the proceeds of sale of the property. We failed to see why the Mother should incur time and expenses in pursuing this remedy when N’s maintenance and her carer’s allowance are not and cannot be disputed by the Father.

4)  Condition

45.  In our view, this is an appropriate case to make a Hadkinson order. However, we will confine our order to the payment of N’s maintenance and the Mother’s carer’s allowance but not the ECA expenses which are in dispute. The Mother accepts that the Father has paid the school fees but not the ECA expenses. Since the Father has continuously discharged his obligation of the school fees under the Undertaking, it is not necessary for us to make any order in that regard.

46.  We would impose the following conditions :

1)  Unless the Father on or before 28 February 2022 complies with the order of Judge Own dated 5 June 2015 in FCMP 67/2010 by paying the outstanding sum of $409,616 together with the monthly sums of $13,726 due to N and $10,000 due to the Mother in February 2022 and thereafter paying these two monthly sums when due, the Father’s notice of appeal dated 3 March 2021 by which he appeals from the judgment of B Chu J dated 3 February 2021 and his summons to adduce fresh evidence for the appeal, shall not be heard;

2)  In the event that the Father fails to make any of the payments referred to in paragraph 1), the appeal and the summons shall stand dismissed without further order.

47.  In our view, these conditions are proportionate. They are no stronger than it needs to remove the impediment to justice. These conditions are also in line with the underlying objectives of the Civil Justice Reform as embodied in Order 1A, rule 1 of the Rules of the High Court, such as to increase the costs effectiveness of any practice and procedure and to ensure the case is dealt with as expeditiously as reasonably practicable. A Hadkinson order is another aspect of the Court’s case management power under Order 1B, rule 1(2)(l) in furtherance of the underlying objectives set out in Order 1A.

VI.  Conclusion

48.  Accordingly, there will be an order in terms of [46]. The Father is to pay the costs of and occasioned by this application, to be taxed if not agreed. We will grant certificate for two counsel. The Mother’s own costs are to be taxed in accordance with the Legal Aid Regulations.