NCW v. SJW

FCMC 6612 / 2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 6612 OF 2014

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J U D G M E N T
(Variation of maintenance and remittance of sums owed)

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Introduction

1. There are two applications before the court that now require adjudication. They are both issued by the respondent husband and they are both dated the 22 May 2015. The first seeks a reduction of maintenance from ZAR 56,200 each for the wife and the two children of the family down to zero and the second asks that any sums owed by the husband under the terms of the court order dated the 10 October 2014 be remitted in full.

2. Under the terms of the first court order dated 10 October 2014 the parties agreed that the husband would pay the wife and the two children of the family US$5,233 per month each to be converted into South African rand in the amount of ZAR56,200 per month with effect from the 1 November 2014. It was also agreed that the wife would relocate to South Africa with the two children of the family. In a subsequent court order dated the 29 December 2014 it was further agreed that two properties held by the parties in London would be placed on the market for sale together for not less than GBP800,000. The net proceeds of sale were to be divided so that 77% would be paid to the wife and 23% to the husband, which was representative of the monies initially invested by each side. There were also some other minor agreements including an undertaking by the husband to pay for and maintain a life insurance policy on his life for not less than US$3 million with the wife and the two children being equal beneficiaries under that policy. There were also the normal provisions concerning the dismissal of claims upon each party’s compliance with these terms.

3. The husband says, and I would accept this to be the case, that at the time that he entered into this agreement he was earning in the region of US$22,900 per month made up of three payments, two sums in US$ i.e. US$12,872 and US$1,050 per month both of which were initially paid into a joint HSBC Jersey account and a further sum of HK$71,000 per month that were paid into a joint Hong Kong premier account. It was explained to me during the course of the hearing that the husband was employed as a “fabric professional”. These three sums represented different aspects of his professional obligations at that time including work undertaken in Sri Lanka and Hong Kong. In addition he received other benefits including a rental allowance etc. 

4. The husband left his original employer of many years shortly after the parties reached terms and on the 15 January 2015 he began a new job with a firm called L at a much increased salary of US$400,000 or HK$3,120,000 per annum. Unfortunately for reasons that I will not go into here, this new job was short lived and he was asked to leave after only six weeks. He was paid one month’s salary in lieu. The husband has been unemployed since that time although I am now told, in his closing submission, that he has been offered a six month consultancy contract with an American company for US$29,000 per month. He is hopeful that this will lead to full time work, but in any event is also following up on other opportunities. The wife for her part is a full time mother and she does not currently work in a paid capacity outside of the home. This may have to change in due course.   

The current position

5.   The husband’s current position is that he is able to pay the wife the full amount of maintenance with effect from the end of March 2016. Thus he no longer wishes to proceed with his application for a reduction in maintenance and that summons will subsequently be adjourned sine die with liberty to restore. There shall be no order as to costs. He does however ask that all arrears be discharged with effect from the date of his application. In other words he asks that all outstanding maintenance payments be remitted from the 22 May 2015 to date. It is the husband’s case that he has survived by virtue of the generous support of his partner. He says that he will need to repay her in due course.  

6.   The wife for her part says that she has only likewise managed to survive by borrowing from others including from the husband’s parents and that she will now be obliged to make these repayments in full. She does not believe the husband and accuses him of material non disclosure. She says that he has not contributed towards the financial support of their children and that he has not curtailed his spending habits. She says that he is disingenuous. She wishes the husband to pay what is due and owing in full and asks that his share of the net proceeds of sale of the London properties be paid into court as security in the event that he defaults in making maintenance payments in the future. It is of note however that the wife has not issued a judgment summons, although she says that she was advised to do so and there are no other applications pending for enforcement or otherwise.    

The law  

7.    The husband’s application to vary and remit the maintenance payments was made pursuant to section 11(7) of the Matrimonial Proceedings and Property Ordinance Cap 192, which provides that:

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

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

9.    It is of note however that the court has no ability to vary an order for sale under section 6(1) (e) of the same ordinance. Thus the court has no jurisdiction to entertain the wife’s suggestion that there be a variation of the original order in so far as the husband’s 23% share of the net proceeds of sale of the two properties in London is concerned.  

10.   With respect to the maintenance payments however the court does have a very wide power, including as here the husband’s request to terminate or remit payments. The overall objective is, as always to try to achieve a fair outcome (see M v M, FCMC 4070 of 1990, dated 12 May 2006, unreported).

The husband’s summons dated the 22 May 2015 to remit payments

11.  Following the hearing on the 15 January 2016 I asked both parties to submit further documents in support of their respective positions, which I have now had the opportunity to review, along with the Answers to Requests for Further and Better Particulars submitted by each side. Having done so, it seems to me that the husband largely comes up to proof. I accept what he says about his unfortunate period of unemployment, which is now hopefully at an end. I also accept that he has no income or assets other than as disclosed. It is also clear that he is being financially supported by his new partner. I do not agree from a perusal of his bank and credit card statements that he has overspent and he has largely explained in his Answers why some payments have continued to be made from his accounts.

12.    In turn it is clear that this has been an extremely difficult period for the wife and I accept that she had no option but to borrow monies from family and friends in order to make ends meet. This was not however a situation that was deliberately engineered by the husband.

13.    At the hearing on the 15 January 2016 I directed as follows:

It is directed that in the event that the bank deducts both mortgages from the net proceeds of sale of XXA Y Gardens, Kensel Rise, London NW10, then the sum of GBP48,000 will be released in the first instance to the petitioner (wife) without prejudice to the final outcome of these proceedings.

In the event that the bank deducts one mortgage from the net proceeds of sale of XXA, Y Gardens, Kensel Rise, London NW10 then the division of the net proceeds of sale shall be in accordance with the court order dated the 29 December 2014.

14.  I am told that infact the bank deducted both mortgages from the net proceeds of sale. The wife says that the GBP48,000 should be deducted from the net proceeds of sale before there is a further division of funds. In her closing submission she puts it thus:

SW’s Assets:

S owns 23% in two London properties:

The sale of XXA Y Gardens is concluded and the arrears maintenance received from such sale is calculated as follows:

		PG.2
Sale Price	£590,108
Less Mortgage on XXA & XXB	£476,446.65	Bank required outstanding mortgages on both properties be settled as noted by you honour
Less: Expenses and disbursements	£63,183.00
Sale proceeds:	£50,478.35
Paid to NW	£48,000	As agreed in court on 15 January 2016.
Paid to NW	£1960.10	77% of remaining profit
Paid to SW	£585,48	23% of remaining profit
As 23% owner in XXA Y Gardens, S has contributed £11,040 [R248,400] in arrears maintenance.
The sale of XXB Y Gardens in pending an offer.
Estimated Sale Price	£550,000
Less Estimated Expenses	£61,000
Project Sale Proceeds	£489,000
77% to NW	£376,530
23% to SW	£112,470	[R2,530,575]

The outstanding arrears maintenance for 10 months [May 2015 - February 2016] amounts to R1,680,000.

I ask your honour to enforce the original Consent Summons and Court Order and to reimburse all maintenance arrears totalling R1,680,000 less the arrears already received R248,000

= TOTAL R1,432,000

This would be paid from S’s share of the proceeds of XXB Y Gardens, which are estimated at £112,470.00 [R2,530.575].  These funds would be used to repay the considerable debts incurred in caring for the children.

I ask your honour to enforce the reimbursement of all my legal and travel costs incurred to defend myself in these proceedings.

[Hampton Winter and Glynn R236,000 + PREVIOUS LEGAL FEES R136,000]

R372,000 and travel costs R10,500

TOTAL = R382,500

are also reimbursed from the projected flat proceeds [R2,530,575.]

I also ask your honour that the balance of funds [possibly totalling R716,075] be held by the court in escrow for future maintenance payments [4.2 months] until S finds regular employment, has completed a probationary period and can prove this to the court.  This would afford S ample time to seek employment in order to be able to meet his future maintenance obligations.

I do not accept this proposition.

15.  The husband for his part asks that he be forgiven all outstanding maintenance and presumably on that premise that he be reimbursed 23% of the GBP48,000 advanced to the wife pursuant to my direction above. He says as follows in his closing submission:

3.  ARREARS

During the process of applying for a Variation Order and Discharging Arrears, I have shown through complete Financial Statements that I both have no income and no capital to draw on to pay maintenance.

In line with this, it can also be seen from all Financial Statements that I have been 100% reliant on VC [partner] since March 2015.

I put in my application to discharge arrears on the 22^nd May 2015, and so respectfully ask that no arrears be considered post this date.

I do not fully accept this proposition either.

16.  It seems to me that the husband was genuinely without work for the last year or so and although this is unfortunate this is neither his nor the wife’s fault. I don’t believe he is culpable in that respect; it seems to me that he has done everything within his power in order to find alternative employment. The wife and the children for their part are unfortunate victims of this difficult situation. In such circumstances I don’t think either side should be penalised for events which were largely outside their control. Both however must accept some ultimate responsibility given that they are both financially responsible for their children’s livelihood. It is also clear that it would have been difficult for the wife to immediately find remunerative employment – although it seems to me that this is something that she must now consider, notwithstanding some of the obvious difficulties that she has identified in her affidavits and submissions. Consequently it seems to me that fairness dictates that half of the outstanding arrears shall be remitted. The husband has not paid maintenance since May 2015 – i.e. a period of 11 Months from May 2015 – March 2016 inclusive. Thus ZAR1,854,600 is outstanding as at the end of March (ZAR168,600 x 11 = 1,854,600). Of that sum half shall be remitted – so that the husband owes the wife the sum of ZAR927,300. As at today’s exchange rate that amounts to approximately US$57,730 or GBP40,910 (rounded up)

17. Consequently it is directed that once the second property is sold that the GBP48,000 be added back into the equation and shall be split between the parties on the 77%:23% ratio previously ordered along with the net proceeds of sale of the second property. The husband shall then pay the wife the additional sum of GBP40,910 representing half of the outstanding arrears. The wife shall be responsible for the other half.

18.  Although both parties took some legal advice neither where represented at the hearing. It is also clear that neither could be said to have been entirely successful in the stance that they took. Consequently I will make an order nisi to be made absolute in 14 days time that there be no order as to costs.

19.  There shall be liberty to apply.