L v. Y

FCMC 12396/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 12396 OF 2006

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J U D G M E N T

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Introduction

1. After an 8-days trial of the Petitioner Wife’s claims for ancillary relief upon the dissolution of her marriage with the Respondent Husband, I gave judgment on 27^th June 2007 for the Husband to pay the Wife $10,000 per month for her maintenance for 12 months only and to transfer his interest in their former matrimonial home at Tseung Kwan O (“The Tseung Kwan O Property”) to her subject to the existing mortgage, and that each be allowed to retain their own assets and properties in full and final settlement of their financial claims against each other whereupon all such claims be dismissed, and that the Husband shall pay $14,000 per month for the maintenance of their only child of the family, a son now aged 9 whose custody had earlier been granted to the Wife, on top of his undertaking to be responsible for the son’s school fees (“The 2007 Order”).

2.  The Wife now seeks an upward variation of the child’s maintenance from $14,000 to just over $31,000 per month by way of a summons issued on 4^th October 2007 on the basis of changes in the health condition of the child as well as her own financial situation. The fact that the application was launched less than 4 months after the 2007 Order not surprisingly led the Husband to suspect that it may just be an appeal in disguise.   

3.  His suspicion is further fuelled by the fact that the Wife had earlier on 30^th August 2007 actually sought and obtained leave from this court to appeal against the said 2007 Order but has since not pursued it.

4.    The court must of course guard against such an abuse of the court process if the Husband’s suspicion is indeed valid, and the fact that the Wife is acting in person and may be ignorant of the proper procedure cannot be an excuse, but as will be apparent later, there seems to be some significant developments in her financial situation since the 2007 Order which warrant investigations. Whether they are valid enough to justify bringing the application for variation so soon after the judgment is no doubt one of the issues fall to be determined, but before that it would be material to go into some of the background of the case.

Background

5.  The full background can of course be seen from my earlier judgment, of which I do not propose to recite here save for the most relevant parts, and also to up date the parties’ situation since.

6.  The parties were first married in 1997 when the Wife was then studying for her master degree at the Hong Kong University while the Husband was a lecturer at The Polytechnic University. After the marriage they resided in their joint property at Ting Kok Village, Tai Po (“The Ting Kok Property”), a 3-storey village house which they had purchased with 2 friends of the Husband with the parties owning the ground floor and garden while the friends the upper floors respectively. All the owners also entered into an agreement that the garden was for common use and that in the event of a sale by the parties, they would have to compensate the other owners for their loss of the use of the garden.

7.  The marriage broke down 2 years later in 1999 when the Wife left the Ting Kok Property with her then 1 month old son after discovering of the Husband’s affair with another woman. That marriage was subsequently dissolved in the same year with custody given to the Wife and certain agreed financial provisions by the Husband including monthly maintenance for them and the transfer of his interest in the said Ting Kok Property to the Wife.

8.  After the divorce the Wife completed her master degree and found a job as an university research assistant while the Husband continued to work as a lecturer. In 2002 they agreed to get back together and registered their marriage again in March of the same year. Thereafter they resided at the said Ting Kok Property until late 2003 when they moved to the said Tseung Kwan O Property newly purchased in their joint names, and the Wife quitted her job to stay home to look after the son who had developed a serious condition of skin allergy.

9.  Sadly the 2^nd marriage did not last long either because the Husband had another affair in 2004 which led to these divorce proceedings in 2006 and eventually to the 2007 Order, of which it would be pertinent to refer to 2 of my findings/observations in my judgment which are relevant to the application now before me.

10.  Firstly, I found in my said judgment the Wife to have an earning capacity of between $10,000 and $20,000 per month and that she should be able to return to work after the divorce, hence my order for the Husband’s maintenance for her to be limited for 12 months. I also found the son’s reasonable needs at around $17,000 per month including his share of the Wife’s household expenses, of which the Husband was to shoulder up a major portion at $14,000 due to his then much higher income of about $70,000 per month.

11.  Secondly, I did not find it necessary in my said judgment to take into account of any financial impact on the Wife of possible Legal Aid First Charge for her costs incurred earlier in those proceedings when she was legally represented, or of her potential liability to a claim by the other owners of the said Ting Kok Property for the loss of enjoyment of the garden in the event of the sale of her property, on the basis that neither had materialised then and were deemed unlikely to do so in the near future.

12.  However, the Wife now says that both events have since in fact occurred in that Legal Aid Department had charged her Tseung Kwan O Property for $56,483 for which she had to borrow from a friend Madam Mak to pay off in one go with a monthly instalment of $5,700 each to repay her friend, while the owners of the said Ting Kok village house had also filed a suit against her in the District Court and as a result she had to obtain a bank loan to settle their claims in the total sum of $130,000, for which she has to make another monthly repayment of $7,666 to the bank, both of which have now exerted such huge financial burden on her that she says she can no longer afford to share the son’s expenses, which she claims to have also increased substantially since the start of his new school term in September 2007, such as for his additional private tuitions and extra-curricular activities as well as medical treatments for his skin condition which has since worsen, all of which no doubt will be looked at in more details later on in this judgment. 

13.  My finding about the Wife’s earning capacity in the earlier judgment however turned out correct as she has since October 2007 found a job working in the commercial sector at a monthly salary of $13,000. She has also hired a domestic helper mainly to look after the son while she is at work, the expenses for which she has attributed to the son’s. The Husband does not seem to dispute the need for the Wife hiring the helper to look after the son, he however takes great issue over the necessity of the son’s increased expenses, and in particularly the Wife’s disposition of her Ting Kok Property which she transferred to her elder brother shortly after the 2007 trial but before judgment allegedly in settlement of all her debts due to him, only for him to sell it in less than 2 weeks later for a profit of some $570,000, all of which the Husband suspects to be part of the Wife’s attempts to mislead him and the court as to her true financial situation, which was of course strenuously denied by her as an unfounded and malicious accusation.

14.     According to the Husband, there have also been significant changes for the worse in his financial situation, as he has since married his girlfriend from Taiwan who has come to live with him in Hong Kong on a tourist visa and is therefore said to be unable to work and hence financially dependent on him, while his income has allegedly also gone down due to less teaching allowance, hence he claims he cannot afford to meet the son’s increased expenses, all of which he argues can be easily met with the sale proceeds of the Ting Kok Property which he believes in fact being kept by the Wife in some undisclosed account.

15.  It was therefore clear from the beginning that there could be no agreement between the parties and hence the application proceeded to trial after they had filed their respective Financial Statement and additional affirmations, during which both gave oral testimony and were extensively cross-examined.

The Principles on Variation

16.    The power to vary a periodical payment is expressly provided by s. 11(1) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“MPPO”) :

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

17.    How this power is to be exercised is stated in s. 11(7) :

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

18. The traditional or old approach to variation was not to re-fix afresh the amount of maintenance but to consider the amount of change in the actual means of the parties so that the new order should merely be increased or decreased roughly in proportion to the change in the means : Foster v Foster [1964] 3 All ER 541; Jackson’s Matrimonial Finance and Taxation, 7^th Edition, Ch.3. 131.

19.  The modern approach however, as required by s. 11(7), is for the court to consider all the circumstances of the case, and that it is not required to proceed from the starting point of the original order but look at the matter afresh : Flavell v Flavell [1977] 1 FLR 353 following Lewis v Lewis [1977] 1 WLR 409; Garner v Garner [1992] 1 FLR 573; AEM v VFM, CACV 261/2006, CA.

20.  Any change in any of the matters to which the court was required to consider when making the original order was one of the circumstances to be considered : AEM v VFM.

21.  Hence, 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 as in the present case, or that one party may be more adversely affected than the other by the increase in the costs of living : Garner v Garner.

22.  At the same time the basis and intended effect of the original order must be relevant factors to which the court on variation should pay regard, in particularly where the time lapsed between the original order and the application seems relatively short as in the present case, or where the order was the result of the parties’ agreement, there should not be a radical departure from the approach taken by the parties themselves when they entered into the agreement : Boylan v Boylan [1988] FLR 282.

Changes in Wife’s Financial Position Since the 2007 Order

23.   There is essentially no dispute by the Husband over the Wife’s liability incurred since the 2007 Order in respect of the Legal Aid First Charge and the compensation claims by the other 2 owners of the Ting Kok Property totalling $186,483, as both are well supported by documentary evidence, and for the latter he claims he is also similarly liable, but according to the Wife, these are not her only financial woes.

24.    Her case is that when the Husband was to transfer his interest in the Tseung Kwan O Property to her pursuant to the 2007 Order, she was required by the mortgagee bank to discharge part of the then outstanding mortgage of about $1,500,000 because of concern over her ability to meet the existing monthly mortgage payment all by herself given her limited income. She therefore borrowed $500,000 from her parents’ life savings to reduce the mortgage down to about $1 million, and upon the transfer she mortgaged the property to another bank for $1,470,000, from which she repaid $500,000 to her parents. She also borrowed another sum of $130,000 from her said friend Madam Mak to pay off the Legal Aid First Charge as aforesaid and some of her credit card debts. Accordingly the total amount of personal debts she has incurred since the 2007 Order is $260,000, for which she has to make a total monthly repayment of $13,366 each, which is more than what she now earns, not to mention the mortgage monthly instalment of $11,287.31 each as well as her other necessary expenses.

25.      In the 2007 Order I found the Wife’s total monthly expenditure just below $30,000, with slightly more than half attributed to the son’s. Because of the said loans repayments, as well as the various increased expenses of the son, the hiring of the domestic helper and the increase to her personal expenses since her return to work, the Wife now claims that her total monthly expenditure has gone up to almost $58,000, nearly twice as much as it was in 2007.

26.      What accounts for such a dramatic increase in her expenses over such a short period of time must no doubt be due mainly to those loan repayments, but surely they cannot be said to have anything to do with the son’s expenses and hence not claimable in the present application before me, or at all since the Wife’s own financial claims have already been dismissed by the 2007 Order.

27.     While that is certainly true, and the court must always guard against any attempt by a party to disguise his/her own claims in his/her child’s application, the statutes however require the court to have regard to any change in the financial circumstances of that party since the original order, and there cannot be any dispute that the Wife in this case has indeed taken upon new and significant financial liabilities, which are inevitable if I may add, since the 2007 Order which must be taken into account in particularly as to their impact on her ability to meet part of the son’s expenses, as she was expected to do so under that order.

28.   There is no dispute that the Wife’s present limited income does not enable her to do so, as aforesaid it is not even sufficient to meet her own expenses, and hence the entire case turns on whether her disposition of the Ting Kok Property did earn her large sum of profit enough to meet her said liabilities and whatever increase in the son’s expenses, and therefore makes her present application unnecessary or unjustified as suggested by the Husband, or that it was indeed to set off her debts due to her brother, and that his subsequent quick turnover with a huge profit was just a lucky coincidence to him, as alleged by the Wife.

The Dispositions of Ting Kok Property

29.     The following facts are indisputable :

(a) on 21^st May 2007, about a month after the conclusion of the evidence on the ancillary relief trial but before final submission and judgment, the Wife entered into an agreement for the sale of the property to her brother Lau Chiu Ming (Paginated Bundle : 95 - 112);

(b)    in the agreement it was stated that the purchase price was for $1,280,000, of which an initial deposit $100,000 had already been paid to the Wife, a further deposit of $28,000 was to be paid upon the signing of the agreement, and that the balance of $1,152,000 were to be paid upon the completion of the sale on or before 30^th June 2007;

(c) the total outstanding mortgage on the property to be discharged upon completion was $1,022,167.28 (PB : 113);

(d)    on 1^st June 2007, 10 days after the Wife’s agreement to sell to her brother and before completion, the brother signed an agreement for sub-sale of the property to another purchaser for $1,850,000, with a gain on paper of $570,000 (PB : 149).

30.  The Wife’s case is that by May 2007 she already owed her brother $460,000, she therefore decided to transfer the property to him for nil consideration in settlement of those debts, as she had always intended to do right after her divorce proceedings, and she figured that the property was then worth $1,450,000 which, after deducting for the outstanding mortgage of about $1 million, would leave just about enough to settle the debts. They therefore signed an agreement to that effect on 10^th May 2007 to sign an agreement to that effect (PB : 94), and proceeded to sign the formal sale and purchase agreement on 21^st May 2007. As there was actually no money changed hands between them, the figures in the sale and purchase agreement were only arbitrarily put there by her brother as suggested by their lawyers handling the transfer.

31.  Shortly thereafter, according to the Wife, her brother was informed by his estate agent that there was a purchaser very keen in purchasing the property and was willing to pay a very good price for it, and so her brother started to bargain with the purchaser and finally agreed to sell to him for $1,850,000, making a profit of almost $600,000 which he later lent to their elder sister to help her out over the mortgage problem of her property.

32.  The Husband as aforesaid believes that the whole transaction was engineered by the Wife in her brother’s name to mislead the court, and that it was she who sold the property and pocketed the profit, and that when part of it in the sum of $500,000 later showed up in one of her bank accounts, she again lied to the court that it was money borrowed from her parents.

33.  Having considered all the evidence before the court including the parties’ testimony, I must admit that the Husband does have some very strong reasons for his reservation about the Wife’s story over her disposal of the Ting Kok Property.

34.  In my earlier judgment I found the Wife to be a highly intelligent and capable person who would have been working for her brother in his electronics import/export business after the breakdown of her marriage, and while I did not doubt the brother’s various assistance given to her over the years, I had my reservation over her alleged debts due to her brother under the circumstances and that there was no documentary evidence of any payment of such loans deposited into her bank accounts, for which she explained that it was intentional to avoid rousing the Husband’s suspicion, nor was there any evidence from her brother on that occasion confirming such loans, not even an affirmation from him or a simple letter or statement on that occasion, despite their very good relation.

35.  On this occasion there is still no direct evidence from the brother about the loans either by way of affirmation or oral testimony, but the Wife has produced something in writing (PB : 94), which was allegedly prepared by her brother and purportedly contained terms of the agreement to ensure that she would not change her mind about the transfer, but which according to the Husband appears to be inconsistent with the fact of their good relationship.

36.  While the Wife’s explanation that it was her sister-in-law who was not very happy about her husband’s continuous financial assistance to her without any prospect of being repaid that caused the brother to produce this agreement may at first glance appear plausible, it is in my view ultimately unsatisfactory as it bags the obvious question : If there was indeed already an agreement at the beginning, surely the brother would have told his wife so, why was it then necessary for it to be reduced into writing years later just to alleviate his wife’s concern?

37.  Furthermore, I find some of the terms and wordings in that document too deliberately technical for that purpose of what was supposed to be a mere statement confirming or rectifying an agreement between brother and sister back in late 2004 when the Wife said she first approached her brother for financial assistance after the Husband walked out of their marriage.

38.  According to this document and the Wife’s evidence, the agreement was that the brother would subsidize her needs and expenses for $10,000 to $20,000 per month pending her divorce, and that upon the conclusion of the proceedings she was to transfer her Ting Kok Property including the garden and car parking space to him in settlement of the loans he was to make to her. This however immediately raises several other obvious questions.

39.  First, if the Wife was then indeed in financial difficulties, why did she not sell the property instead to reduce her financial burden and to use the sale proceeds to meet her needs and expenses, which would have been easier and more direct, rather than pledging it to her brother for loans on monthly basis?

40.  Secondly, how could they have known at that time that the net worth of the property would happen to match the total amount of the loans by the time when the divorce proceedings were over, when there were in fact so many variables and uncertainties which were beyond their control, such as the possibility that the proceedings could have dragged on for so long that the total amount of the loans far exceeded the value of the property, or vice versa, or that the Husband might have settled the financial matter with the Wife much sooner to render her borrowing from the brother no longer necessary, or that they might have reconciled that there would be no divorce, not to mention the fluctuation of the property market and hence the uncertainty over the worth of the property?

41.  Thirdly, why was the brother willing to accept the property in settlement of his loans to the Wife, what did he know about its value, and what did he intend to do with it, as his home, as a long term investment, or for immediate sale for profit? According to the Wife’s Answer to the Husband’s Questionnaire (PB : 4, para.9), the brother appeared to think all along that it was not worthwhile to keep the property, in which case then why was he willing to take over the property, or accept it as settlement of his sister’s debts? All these questions have not been answered by the Wife at all or satisfactorily, nor by the brother in the absence of his testimony. 

42.  I do accept that at that time the property had a substantial mortgage for which the Wife had to make monthly instalment payment, and that if the agreement were for the brother to take over that burden so that when he paid off the mortgage, the Wife were to transfer the property to him, in which case I would be more prepared to acknowledge such an arrangement as both sensible and credible, but the evidence from the Wife and the said document clearly show that the payments from the brother were to meet her living and urgent expenses instead. Besides, the fact that at the material time the property had been let out with rental income sufficient to meet its mortgage instalments would render such a hypothesis highly unlikely.

43.  Furthermore, according to an e-mail dated 25^th April 2007 (PB : 122), about a month prior to her transfer to her brother, the Husband did suggest to the Wife to sell the property to one of the other owners of the village house for $1,450,000 or higher in settlement of the compensation dispute, and at the same time make a good profit of some $450,000 after deducting the then outstanding mortgage of about $1 million, which she could obviously use to meet any of her needs or obligation including whatever debts which she might indeed be owing to her brother, but which proposal was rejected or ignored by the Wife, which just further fuel the Husband’s suspicion that she might have already received some better offers.  

44.  It is perhaps significant that the document also reveals that the tenancy was to expire on 15^th May 2007 without renewal and the tenant would vacate the property, thereby rendering it possible for it to be sold with vacant possession, hence at a higher price. Could this therefore be the real reason why it was sold at that time? The Husband believes so, as he claims that village houses like the Ting Kok Property do not have a high demand and would normally take months to find the right offer, as the Wife has admitted herself that she had been trying to sell it unsuccessfully for years, and certainly not possible to do so in less than 2 weeks, as in this case.

45.  The Husband in fact believes that the Wife had been placing the property in the market for a period of time through estate agents, and must have received some good offers, including one from the next door neighbour whom he knew from the time he was staying there was all along interested in buying the property, so that when the tenancy expired, the Wife was able to sell the property within such a short time, and that it could not have been just a lucky coincidence, as alleged by her, that a purchaser suddenly appeared right after her agreement to transfer to her brother.

46.  Luck and coincidence do of course happen in life, the question is whether it is likely to be the case here under the circumstances, and the evidence on the Wife’s spending pattern right after the transfer of the property, as far as the Husband is concerned, does not seem to support that, but instead further fuels his suspicion.

47.  According to the statements of her Hang Seng Bank credit card, her only credit card in use, for the months from May to August 2007 (PB : 90a – 90c), the spending appears to have a sudden and dramatic surge in particularly on personal grooming such as slimming products and program, hairdressing, cosmetics and clothing, while on 30^th June 2007, which happened to be the completion day for the sale of the property, there was a spending of $1,080 at a seafood restaurant which appears extravagant compared with most other items in those statements. Her explanation for the items of personal grooming is that they were in preparation for her return to work, but the Husband believes that they were more like indulging herself and celebrating for making a handsome profit from the sale of the property. I can’t help thinking that it might well be a bit of both.

48.  Above all, the Husband believes that the sale proceeds have actually found their way back into the Wife’s Hang Seng Bank account under the guise of a loan of $500,000 from her parents when she tried to switch the mortgage on the Tseung Kwan O Property from the Bank of China to another bank when the Husband was to transfer his half interest to her under the 2007 Order.

49.  The Wife’s Hang Seng Bank account statements indeed show a deposit of $500,000 on 27^th September 2007 which she claims were her parents’ loan, from which she withdrew $403,000 on the same day for partial discharge of the original mortgage, followed by 2 deposits of $365,600.64 and $130,000 on 21^st and 26^th February 2008 respectively which she says were part of a new mortgage obtained from the China Construction Bank, and from which she withdrew $480,000 on 26^th February 2008 to repay her parents (PB : 35 – 38).

50.  While there is no question over the Wife’s obtaining a new mortgage from the China Construction Bank which is evidenced by its letter of confirmation of 15^th February 2008 (PB : 30), the same cannot be said about the source of the earlier deposit of the $500,000, as the only evidence was from the Wife’s words, and while I appreciate that she might not want to involve her parents in these proceedings, I fail to see why she could not at least produce a copy of their bank passbook, as requested by the Husband, to show the source of that sum was indeed from her parents.

51.  The Husband as aforesaid of course suspects that this sum in fact came from the sale proceeds of the Ting Kok Property which, as far as time and amount are concerned is entirely possible as by then the property had already been sold and payment made. The Wife’s evidence however is that her brother had instead used the sale proceeds to help their elder sister to pay off the mortgage of her own property when she got into serious liquidity problems, a fact she insists within the Husband’s personal knowledge as he was a guarantor of her mortgage during their marriage, and that as a result of that his guarantee had since been discharged.

52.  While that may well be true, it does not necessarily follow that the sister discharged it with the brother’s assistance, let alone with the sale proceeds, and again, other than just the Wife’s words, there was no evidence from either of her said siblings, nor any documentary evidence such as bank records which I believe could be easily produced with the siblings’ co-operation.

53.  In short, there seems to be just too many inconsistencies, contradictions, and deficiencies in the Wife’s evidence to render it difficult to accept that her transfer of the Ting Kok Property to her brother was just a settlement of her debts due to him, and too much of a co-incidence that he could turn around and sell it within such a short time and for such a large profit, only to use the money to bail out the financial problem of another sister. 

54.  One may of course see the Wife arguing why would she want to go through all these to hide the sale proceeds of the Ting Kok Property, as after all, the Husband had never made any claims against that property in the divorce proceedings, and that the sale agreement was signed well before my judgment, surely she could not have known at that time that the court’s decision would fall short of her expectation and that therefore there would be further litigation with the Husband, and hence she must conceal the sale proceeds?

55.  The Husband suggests that the answer must be that the Wife realised that he would find out about the sale sooner or later from the other owners of the property, and that in order to pre-empt any consequential action by him for reduction of whatever maintenance that he was to pay under the 2007 Order, she decided that that fact could not be made known to him, hence she engineered such a scheme to mislead him and the court.

56.  If this was indeed a scheme to conceal the sale proceeds as alleged by the Husband, I must admit that it was so ingenious and sophisticated that one must ask whether it is something that the Wife is capable of pulling off, as she did, as aforesaid, also borrow 2 loans : $93,000 with her credit card and $130,000 from her friend Madam Mak after the sale, which must be part of the scheme to give the impression of her financial difficulties, as otherwise they would be unnecessary if she had indeed pocketed the proceeds.

57.  In my earlier judgment I found the Wife a highly intelligent and capable person, and nothing I have seen or heard in this application has caused me to change my mind. In my view she is certainly capable of devising such a scheme to conceal the sale proceeds from the Husband, whom she still greatly resents, and I do not blame her for that, given that she holds him responsible for breaking up their marriage not once but twice, and that she has all along expected a much higher award on the ancillary relief from him, which would therefore provide a perfectly legitimate motive, as far as she was concerned, for not letting him know of the sale proceeds for fear that he might use it as an excuse to reduce the son’s maintenance.

58.  In conclusion, and while not without hesitation but ultimately on balance of probability, I am unable to accept the Wife’s case that her transfer of the Ting Kok Property to her brother was just a straight forward set-off of her debts due to him, or that she has not benefited at all from the profits out of the sale. Even if what she said about her transfer to her brother were true, I would still find it difficult to accept that she did not share in the profits, given her good relationship with her brother who was obviously aware of her various financial burden, in particularly those arising from the Legal Aid first charge and the compensation claims over the property, it would indeed be incredible that her brother would not share the profits with her, if not hand over the entire amount to her.

59.  However, that does not necessarily follow that I must accept the Husband’s argument that with the profit made from the sale, the Wife would be able to meet whatever increase to the son’s expenses since the 2007 Order and hence her claims should go out of the window, as the Ting Kok Property was part of her fair share of the matrimonial assets divided between the parties at the time of their divorce, and was meant to be for her own use and benefit, hence is she not entitled to argue that its sale proceeds should also be for her own use and benefit, and not to meet the son’s increased expenses which should instead be met by the parties’ income?

60.  While it is true that in my earlier judgment when I made the order for the Husband to bear the major portion of the son’s expenses, it was mainly on the basis of the respective income of the parties without taking into account their assets situation, there is no question that when the court considers a party’s means and ability to pay maintenance, it does not just look at his/her income but also other resources, and capital and savings which generate income are certainly part of that party’s resources. With such a fairly substantial amount of sale proceeds available, clearly it would go a long way to solve her problem with the son’s increased expenses. Or so it seems, but it will be necessary to first look at her expenses.

The Wife’s Expenses

61.  As aforesaid, having included her monthly loan repayments to the credit card company and Madam Mak, the Wife puts her total monthly expenses for herself and the son at almost $58,000, the bulk of which are for her general household expenses of $36,459 including mortgage instalment of $11,287 and the 2 said loan repayments of $13,366 which account for 2/3 of the total amount. With the sale proceeds, she can certainly pay off the 2 loans right away, thereby reducing her household expenses significantly. However, it is also clear that the remaining balance of the sale proceeds would not be sufficient to pay off the mortgage, and given the fact that the Husband did not dispute the rest of the household expenses including the domestic helper’s, the total amount for this item would remain quite substantially at slightly over $23,000 per month.

62.  As for the Wife’s personal expenses, given her return to full-time employment and hence necessarily additional spending on outside meals, travelling, and personal grooming all of which were not challenged by the Husband except for the school fees of $3,000 for a short course on some religious study which I agree that the Wife could have paid for from the sale proceeds and therefore disregard it, which would otherwise bring her personal expenses to about $5,000 per month.

The Son’s Expenses

63.  The Wife has put the son’s monthly expenses at $13,305 before taken into account of his 1/3 share of the household expenses which would otherwise add a further sum of some $7,000 to $8,000, bringing the total amount to just below $21,000 per month, some increase by $3,000 to $4,000 since the 2007 Order. As aforesaid the Husband does not dispute the need to employ a domestic servant for the son, and his main issue is over the son’s additional tuitions/trainings and extracurricular activities such as piano and other music lessons, table-tennis and painting which he argues as excessive or unnecessary, as well as treatments for his skin allergy conditions which he says the Wife can always seek reimbursement under the health insurance provided by his employer.

64.  Given the facts that the son, as apparent in my earlier judgment, is a gifted child in learning and music, and that the Husband, for reasons not necessary to go into here, seldom visits him and hence not in a position to properly appraise his current progress, I am inclined to accept the Wife’s evidence as to the necessity of such activities, and while she can claim from his employer’s insurer for reimbursement for medical expenses, such reimbursement is usually restricted to only $200 each, which is far from enough for the son’s quite severe skin condition. Accordingly I will put his personal expenses at $12,500, but round it up to $20,000 per month including his share of the household expenses.

65.  On the basis of the above calculation, I have therefore arrived at a total monthly expenses for the Wife and the son at $40,000, which means she will have a monthly deficit of some $13,650 after taking into account of her own income and the Husband’s current maintenance for the son, and with the cessation of his monthly maintenance of $10,000 for her by July 2008. While she can and should use the balance of the sale proceeds, which is in the nature of a capital, to meet some of these deficits, the question is : Is it fair or reasonable to expect her to use her capital to shoulder up the entire burden of meeting the increase to the son’s expenses instead of looking to the Husband for assistance? Before answering that question, I will of course need to consider the Husband’s current financial situation.

Husband’s Financial Situation

66.  The Husband is still a lecturer at Hong Kong Polytechnic University under what is said to be his 7^th 3-year contract and at a basic salary of $54,445 plus housing and education allowances of $11,980, and additional teaching allowance averaging $8,000, giving him a total income of $74,425 per month. The Wife however disputes that this is all he earns, referring to his tax returns which show his total income for 2006/07 at $978,317, and a similar amount in the year before, giving a monthly average of $81,526, and that he also stands to receive a gratuity payment at the end of each contract, which amounted to more than $180,000 on his last contract and should therefore bring his average income to more than $1 million per annum, or close to $90,000 per month.

67.  Whether he is indeed earning that much or not, the Husband argues that it would not matter as his current expenses would still have taken him well over his budget at more than $94,000 per month according to his stated expenditure in his Financial Statement (Form E) (PB : 166 – 168). That is however not very accurate as at the time when he was preparing that document, which was in January 2008, he was still paying the monthly maintenance of $10,000 for the Wife under the 2007 Order, but that payment has since ceased and so his current expenditure should come down to a more manageable $85,000 per month.

68.  The Wife however believes that it should come down even further as she believes that his present wife should be working and earning in Hong Kong, and hence sharing his household expenses so as to reduce his burden accordingly, while he should also be finishing his Ph.D. course and will not have to pay any more school fees for the same. Furthermore, she argues that some of his expenses such as his part-time domestic helper is no longer necessary in view of his claim that his wife is unable to work without a permit and hence can take over from his domestic helper, while his car loan for a car for his wife is a luxury and should not take precedence over meeting his son’s needs.

69.  While the Wife cannot have it both way with her argument about the Husband’s expenses for domestic helper, which would be valid if his wife does not work, in which case there would be no income from her to share his household expenses, but if she does work, then it would not be unreasonable for him to have a part-time domestic helper. The truth is, I believe, that it is quite likely that his wife does work, as she used to do in Taiwan in health product business, and having been involved in some promotion/exhibition activities in Hong Kong after her marriage to the Husband, and having formed a company here for that business, I fail to see why she would not be able to carry on such business here as alleged by the Husband, as she could easily apply for the necessary permit. This is perhaps also one of the reasons why she needed him to buy her a car for the purpose of her business.

70.  Even though his present budget may appear to be fairly tight, with the completion of his Ph.D. course, as pointed out by the Wife, the Husband can certainly expect a promotion or at least a raise to his salary in the near future. For all the reasons aforesaid, I am satisfied that he is well capable of raising his maintenance for the son to meet the recent surge in his expenses, the question I should ask myself when reaching my conclusion is : Given the windfall the Wife has reaped from the sale of the Ting Kok Property, should she not also share those expenses?

71.  As aforesaid, the Ting Kok Property was part of the matrimonial assets which I divided between the parties in my 2007 Order intended for their own use and benefits, and hence was not taken into account, as were the other assets, when I decided on the amount of maintenance each was to be responsible for their son, which was mainly on the basis of their respective earnings and earning capacity. This of course does not mean that the court will not have regard to these assets when it comes to determine on child’s maintenance, as they certainly can be an income-generating resource to provide maintenance such as rental income from a property, interest earned on a bank savings, or dividends from a share portfolio.

72.  It is however not entirely clear how much of the sale proceeds now remains with the Wife, but even assuming she had all of it to herself without sharing with her brother, which would not be unlikely given their good relationship and his various assistance provided for her over the years, after deducting for the 2 loans as well as meeting her monthly deficits and the son’s increased expenses over the past year or so, I do not expect that there would still be a large balance, and I agree that given her limited income, the bulk of which would have gone into meeting the monthly mortgage for a roof over the head of the son, and given the Husband’s ability, it would be fair and reasonable for the Husband to increase his maintenance for the son to $20,000 per month under the circumstances.

73.  I therefore so order accordingly and the payment is to commence on 1^st October 2008, and payable thereafter on the 1^st day of each month until the son reaches the age of 18 or ceases full-time education whichever is later, or until further order, but I make no order as to costs, which is an order nisi to be made absolute at the expiration of 14 days.