WKS v. LKKA

FCMC 17953/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 17953 OF 2012

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JUDGMENT
(VARIATION OF MAINTENANCE)

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1.  This is a hearing of the Petitioner (“the mother”)’s application for an upward variation of the maintenance payable under the consent order dated 12 July 2013 wherein the Respondent (“the father”) was ordered to pay a monthly sum of $3,000 as maintenance for the son (“Z”).

2.  The mother now asks for the maintenance to be increased to a monthly sum of $13,000 whilst the father asks for the existing order to be discharged. However, I have to point out at the outset that the father’s request only appeared in his Statement of Open Proposals dated 24 August 2015. As the father has filed no notice of application for ancillary relief or inter-partes summons for such relief, I am afraid I am not in a position to deal with the father’s request at this hearing.

Background

3.  The parties were married in 2006.

4.  In 2008, Z was born who is now aged 7, a primary school student living with the mother in Hong Kong.

5.  The whole family was relocated to the UK in May 2010 as the father was posted there as a Tax Manager.

6.  The parties started separation in November 2011 when the mother and Z returned to reside in Hong Kong on a permanent basis.

7.  The mother filed a petition for divorce in December 2012 based on 1 year separation with consent. A decree nisi was granted on 12 July 2013 which was later made absolute on 27 August 2013.

8.  By a Consent Order dated 1 March 2013 (“the custody order”), the custody, care and control of Z were given to the mother with reasonable access to the father. In the same order, the father was also ordered to pay a monthly sum of $3,000 as interim maintenance for Z.

9.  In another Consent Order dated 12 July 2013 (“the maintenance order”), the interim maintenance of $3,000 was formalised into a final maintenance order in which the father was required to make such payment into a HSBC account held by the mother.

10.  However, in less than a year’s time, i.e. on 18 June 2014, the mother issued a Notice of Application for Ancillary Relief asking for an upward variation of the maintenance order. Almost as a knee-jerk response, the father also issued a summons for the variation of the custody order in which he asked for the custody of Z to be given to him.

11.  During the Children Dispute Resolution hearing held on 1 April 2015, a very detailed plan on access was worked out between the parties after which the father decided to withdraw his application for variation of the custody order. However, as the parties still failed to reach any agreement on the mother’s application for variation of the maintenance order, the case has to be adjourned to today for trial.

The Legal Principles

12.  The Court’s power to grant an order for variation is governed by s11 (1) and (7) of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) which provides as follows:

“11. Variation, discharge, etc. of orders for financial provisions

(1) 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.

….

(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 and, where the party against whom that order was made has died, the changed circumstances resulting from his or her death.”

According to the said provision, the court, in considering such an application for variation, has to consider all the circumstances of the case and in particular, any changes in the matters to which regard has been made in reaching the original order.

13.  In the case of AEM v. VFM[1], Cheung JA has explained the modern approach in dealing with such an application at paras 14.4-8 of the Judgment:

“4. The modern approach, as required by section 11(7), is for the Court to consider all the circumstances of the cases. The Court is not required to proceed from the starting point of the original order but look at the matter afresh: Flavell v. Flavell [1997] 1 FLR 353 at 357B following Lewis v. Lewis [1977] 1 WLR 409 and Garner v. Garner [1992] 1 FLR 573.

5. 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.

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 FLR 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.”

14.  As to the weight to be attached to the original order, Tang VP (as he then was) said in the case of HCTT v. TYYC [2008] 5 HKC 86 at paras 15-16:

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

  “Almost invariably, an application to vary an earlier periodical payment order will be brought on the basis that there has been some change in the circumstances since the original order was made; otherwise, except in exceptional circumstances, the application will, in effect, be an appeal. If an order is not appealed against, or is made by consent, then the presumption must be that the order was correct when made. If it was correct when made, then there will usually be no justification for varying it unless there has been a material change in the circumstances. However, because of the impact of continuing inflation, because children grow older and cost more to support and because, for example, the cost of living in its increase may hit one party harder than another, it will usually follow that, if time has passed, there will inevitably have been changes in the circumstances, of the parties concerned.

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

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

15.  I shall bear the above principles in mind when I come to consider the facts of this case.

The Case of the Mother

16.  The mother is now aged 33. She used to work as a secretary but has ceased her employment since about 2009 after the birth of Z.   After her separation with the father in 2011, she has entered into a new relationship which later blossomed into a marriage with her present husband, Mr C. From this relationship, she has given birth to 2 other children, one aged 3 years and the other 9 months as at the date of this trial.

17.  The mother is now living with Z, the 2 children with Mr C and Mr C himself. She is a full time housewife with the assistance of a domestic helper. In her Form E, she stated her total monthly expenses amount to $144,726 out of which $52,026 is for the children.

18.  As to the monthly expenses of Z, the mother has set them out in a table annexed to her affirmation (page 259 of the Bundle) which can be summarised as follows:

Item	2012/13	2013/14	2015
School fee	$3,750	$8,727	$10,472
Extra tuition
-Mandarin	-	$2,313	$2,423
-English	-	$1,234	$1,293
School books/stationery	-	$200	$210
Transport to school	-	$1,500	$1,572
Medical	$100	$300	$314
Extra Curricular Activity
-Piano	-	$1,508	$1,580
Entertainment/presents	$80	$200	$1,268
Holidays	$1,000	$3,500	$3,667
Clothing/shoes	$500	$1,500	$1,572
Insurance premia	$2,511	$2,511	$2,631
Lunches/pocket money	-	$2,000	$2,095
Other transport	-	$1,500	$1,572
Uniform	-	$200	$210
Meals	$400	$1,000	$1,048
	_____________________________________________
	$8,341	$28,193	$31,924

19.  Therefore, it is the mother’s case that at the time of her application (in 2014), the monthly expenses of Z have increased to about $28,000 and by the time of trial (in 2015), they have further increased to about $32,000.

20.  It is her case that the father should bear half of that amount.   As at the time of application, half of Z’s monthly expenses was $14,000, but she was willing to give some concessions and asked for the father’s contribution to Z’s expenses at $13,000 only.

The case of the father

21.  It is the father’s case that the application for variation of Z’s maintenance should be refused. He based his objections on the following 4 matters:

(1) There was no material change of circumstances;

(2) The mother was asking for an unfair portion of Z’s expenses to be borne by him;

(3) The standard of living now enjoyed by Z far exceeded the standard he enjoyed during the existence of the marriage; and

(4) Z was not being educated in the manners in which the parties expected during marriage.

22.  According to the father, the reasonable monthly expenses of Z should be in the region of about $20,000 and based on the father’s financial resources, he viewed that his fair share of contribution should be $2,000. However, as a gesture of goodwill, the father is willing to maintain the present sum of $3,000. Having said that, the father also submitted that in order to avoid any future unreasonable application by the mother which would be unfair to him, he asked the court to discharge his liability to pay the mother any sum towards Z’s maintenance and in its stead, he is willing to pay GBP 250 monthly into a trust for the benefit of Z until his attaining the age of 18 years.

Discussion

23.  In considering whether there should be a variation of the maintenance order in favour of Z, I am duty bound to take all the circumstances of the case into account, and in the particular context of this case, the following matters.

Change of circumstances?

24.  As I understand it, it is the mother’s case that Z‘s expenses have increased substantially because he is now an older boy and has been accepted by an international school in Shatin (“ICS”).  As can be seen from the table in paragraph 18 above, most if not all of the increases are education related, for example, school fee, extra tuition fees, transportation, etc.   These are the new circumstances that, according to the mother, would justify an upward revision of the father’s contribution towards Z’s maintenance. 

25.  In this regard, I note that Z was 5 years old when the maintenance order was made by consent on 12 July 2013. That order was a result of a consent summons signed by the parties on 28 February 2013 in which the father’s payment of Z’s monthly maintenance was agreed at $3,000. According to the school fee payment records (pages 229-233 of the Bundle), the mother started paying the ICS school fees in January 2013 in order to reserve a place in the academic year starting August 2013. She also paid a debenture (in the sum of $190,000) later on 9 June 2013. In other words, at the time when the parties settled on Z’s maintenance at $3,000 (i.e. on 28 February 2013), the mother has already started paying the new school fee, or at least the payment of such new school fee had to be within the reasonable contemplation of the mother.    If one should look at the matter in that way, it would be difficult for the mother to argue that Z’s education at ICS was a new circumstance that was not being foreseen at the time of settlement.   

26.  If Z’s education at the ICS was something within the parties’ contemplation or being foreseen at the time of settlement, it is my ruling that that fact cannot be regarded as a new or change of circumstance that could justify a variation of the maintenance order. 

The financial circumstances of the mother and Mr C

27.  The mother is now aged 33. There is no dispute that she is a full time housewife and has no income. However, that does not mean that she and Z are not well provided for. In her Form E, the mother stated that her monthly expenses amounted to over $140,000 which I believe were all provided for by Mr C. She also stated (at page 174 of the Bundle) to have assets in the total sum of about $1,880,000.

28.  I think it is reasonable to assume from the evidence that before the parties’ separation in November 2011, the mother has already formed an intimate relationship with Mr C from which a boy was born in May 2012. That was also before the institution of the present proceedings for divorce by the mother in December 2012.  

29.  It is common ground that Mr C was and still is a medical doctor by profession. His annual income for 2013/14 was $4,171,623 and after deducting his tax liability of $615,743, his net income was $3,555,880, i.e. about $300,000 per month. That was about 2 years ago but there is no evidence to suggest that he is earning anything less in 2014/15 or beyond. In his evidence, he confirmed that he has all along been supporting the mother and Z financially since their return from the UK in 2011. He said he loves Z very much and has already treated him as his own child. He confirmed again in court that he has all the abilities and the will to continue his financial support to the mother and Z in the future. Therefore, it is safe to conclude that no matter how this court should rule on the present application, the financial well being of Z will in no way be compromised.

30.  Mr David Yuen, counsel for the wife, referred me to the English case of Moon v Moon[2] arguing that in terms of maintenance, the father should regard Z as his primary responsibility in his life.   He also referred me to TYCZ v SKY[3] in which Deputy Judge S Lo (as he then was) of the Family Court ruled that the relatives of the mother in that case had no legal obligations to provide financial support to the children in place of the father’s primary responsibilities to support his own children.

31.  As I see it, the general principles as expounded must be right but the circumstances of those cases are vastly different from ours and thus making their relevance being very limited.  Unlike TYCZ v SKY, we are not concerned with the financial support of an ordinary relative of the mother or Z in our present case.  Mr C is the step father of Z who has already treated Z as a child of the family. He is already under a duty to maintain Z according to section 8 (during marriage) and section 5 (at divorce) of the MPPO. Of course, the father is still under a duty to provide reasonable maintenance for Z, but so is Mr C. Therefore, the financial well being of Mr C is a highly relevant factor to be considered in this application.

The financial circumstances of the father

32.  The father is aged 38, a tax manager by occupation.  He is now working full time in the UK and only comes to Hong Kong from time to time to exercise access to Z and to conduct this litigation in person.

33.  In his final submissions, the father stated his average monthly income (after tax) between July 2013 and August 2015 was GBP 3,614.08, equivalent to about HK$45,000. I note that this is different from the figures quoted in his Form E which was $66,000.   However, the figures in the Form E were before tax and based on an exchange rate of GBP 1: HK$ 13 which I believe is no longer the case now. Therefore, I am inclined to accept that his present monthly net income is about HK$45,000.  

34.  The father has re-married and his present wife is a homemaker. The father’s monthly expenses as set out in his Form E were about $66,000 which had already included his tax liabilities. Overall speaking, I am satisfied that the husband is barely able to meet his monthly financial obligations.

35.  I understand that counsel for the mother has tried to set up a case that the father is leading a comfortable life in the UK whilst refusing to raise his contributions towards the maintenance of Z. He pointed out that the father has kept 2 (at one time even 3) cars; he has purchased a town house recently; he has taken various holidays, etc. According to the father, he needs 2 cars, one for himself and one for his wife.   He said he purchased the town house with a “Help-to-Buy” loan from the British Government and a mortgage. He explained the holidays are usually short trips not involving huge expenses. After hearing the father’s explanations, I accept that he is not leading a luxurious life in the UK as was believed by the mother, certainly not when his life style is to be compared with that of the mother and Mr C.

36.  According to the father, which I do accept, that his current net assets are in the sum of about HK$190,000. Therefore, it is apparent that there is a wide gap between the financial capabilities of the mother and Mr C on one hand and the father on the other.

Financial needs of Z

37.  The main issue of this trial is whether the maintenance for Z should be increased or not. Therefore, I think it is necessary to say a few words on the needs of Z.

38.  According to the mother, the monthly needs of Z amount to about $32,000 as at present. The father said a sum of $20,000 is more reasonable.  In this regard, I think there is no definite answer to what a child’s reasonable monthly expenses should be because it really has to depend on the circumstances of the family. I have seen families which have spent amounts well above the sum of $32,000 on a single child, but equally I have also seen families spending may be just 1/10 of that sum.   Therefore, in this particular case, I do not intend to go into the details of Z’s expenses except to say that what is reasonable for a child’s expenses is very much dependent on the value judgment and financial abilities of his parents or custodians.  

39.  In the present case, the mother’s decision to enrol Z with ICS is perfectly understandable as all parents would like to secure the best education for his or her children. The fact that such an enrolment would entail a substantial increase in Z’s expenses is well within the financial abilities of the mother and Mr C and therefore, there is nothing unreasonable about such a decision on Z’s future education.   However, if the mother should require the father to bear half of whatever amount that she and Mr C should think best for Z, a comparison of the parties’ financial resources have to be done to see whether the mother’s request is reasonable under the particular circumstances of this case. This is what I am going to do in the short discussion below.

Should the father’s payment for Z’s maintenance be increased?

40.  As I have indicated in paragraphs 24-26 above, I do not accept that Z’s education in ICS was a material change of circumstance because that was something well within the contemplation of the mother when she agreed to the monthly maintenance of Z. She must have taken that fact into account when she agreed to the monthly sum of $3,000.   When the court grants a maintenance order, it is the legitimate expectation of the parties that it would at least last for a reasonable period of time. If the court should allow the mother’s application, that would effectively mean that the original maintenance order was only valid for about a year from July 2013 to July 2014. That is highly unsatisfactory and therefore unacceptable, especially in view of the fact that Z’s new education was well within the parties’ or at least the mother’s contemplation at the time of settlement.

41.  I have also said in paragraph 39 above that I do not see the mother’s spending of $32,000 per month on Z is in any way unreasonable.   This is because she has the financial assistance from the step father Mr C who is also having a legal responsibility to maintain Z. This is of course not to say that the presence of a step father would necessarily absolve all the responsibilities of the biological father, but the financial affluence of the step father, which would in turn lead to the financial affluence of the mother, would certainly have an important bearing on the reasonableness and therefore the final outcome of this application.

42.  In this particular case, Mr C is having an average net monthly income of $300,000 as compared to that of the father’s at $45,000.   The father’s income is 15% that of the mother and Mr C. 

43.  The mother is having net assets in the sum $1,888,000 whilst the father is having $190,000.   The father’s assets are about 10% of that of the mother.

44.  In view of the vast disparity of income and assets between the parties, coupled with the fact that there is no material change of circumstance that could properly be taken into account, I am not convinced that there should be any variation of Z’s maintenance at this stage.

Order

45.  Based on the above reasons, the mother’s application for variation has to be refused.

Costs

46.  Costs to follow event.  The father should have the costs of the application, including all costs reserved, to be taxed if not agreed.

[1] [2008] HKFLR 106

[2] [1980] 1 FLR 115 at p.117

[3] Unreported, FCMC 6549/2002, 5 May 2011