DC v. AZF

FCMC 13675/2015

[2020] HKFC 181

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13675 OF 2015

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BETWEEN

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J U D G M E N T
( Ancillary Relief )

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1.  This is the Respondent (Wife)’s application for maintenance for the two children of the family.

Background

Marriage and Divorce

2.  The Petitioner (Husband) was born and raised in the United Kingdom. He did not complete tertiary education and has always worked in business consulting. The Wife was born in the United States. She received a Degree in Communications in the United States in 1994.

3.  The Husband left the United Kingdom in his early 20s. The parties met in Hong Kong in 1994 and went to the United States in 1996. They were married on 5 January 1997. There are two children of the family, a son (E), born in 2004 and a daughter, (S), born in 2005 (the Children). In 2008, the whole family came to live in Hong Kong because the Husband wanted to take up employment here. He worked as the Associate Director of Business Development with a monthly salary of $85,000 per month and he was given 13 months’ salary each year.

4.  The Wife was originally a full-time care-giver to the Children. However, after they moved to Hong Kong, she realized that they could not afford the costs of living on the Husband’s salary alone. In 2009, the Wife started working in a well-known international school.

5.  The family has been living in a well known suburban area since their arrival in Hong Kong. They moved into the rented former matrimonial home (the FMH) in 2010. The Wife and the Children are still living in the FMH. The current rental is $28,500.    

6.  The Husband moved out of the FMH in August 2013. The relationship between the parties has been very strained since then. On 26 October 2015, the Husband petitioned for divorce on the ground of two years’ separation. The Petition was uncontested and a Decree Nisi was granted on 3 August 2016.

7.  On 30 August 2016 the Court ordered the Husband to continue to pay to the Wife, interim periodical payments of $4,000 per month for each child until 1 January 2017 or further order [1A/1-2]. Costs were reserved [A1/001-002]

8.  By a summons dated 26 October 2016, the Husband applied for permanent relocation of the children to the United States. Messrs. Stevenson, Wong & Co started acting for the Husband since 15 November 2016.

9.  On 22 November 2016 and upon the Husband’s undertaking to continue to pay for the school fees of the Children and their extra-curricular activities up to a limit of HK$5,000 per month until the end of the school academic year of 2016/2017, a number of orders were made by consent, including inter alia:

(1) Joint custody of the Children with interim care and control to the Wife and reasonable access to the Husband, including unlimited contact by Skype, Face time, telephone, emails or any other form of electronic communications and shared holidays as agreed by the parties. It was further directed that the Children shall not be removed from Hong Kong without leave until they attain the age of 18 years respectively but provided that if either parent do give a general written undertaking to the Court to return the Children or either of them to Hong Kong when called upon to do so, and unless otherwise directed with the written consent of the other parent, that parent may remove the Children or either of them from Hong Kong for any period specified in such written consent;

(2) The Husband’s summons for relocation and alternatively for change of schools be set down for a CDR hearing on 17 March 2017;

(3) The Husband do continue to pay to the Wife interim periodical payments for the Children at the rate of HK$6,000 per month for each child commencing on 1 January 2017 and thereafter on the first day of each subsequent month until further order;

(4) Costs reserved.

10.  In January 2017, the Husband relocated to the United States.

11.  On 17 March 2017 and upon the parties’ undertaking to comply with the Mediation Agreement dated 17 March 2017, the following orders were made by consent [1A/009-1-009-7], inter alia:

(1) The Husband do withdraw his summons dated 26 October 2016 in relation to the relocation application to the U.S. and alternatively for change of schools in Hong Kong;

(2) Joint custody of the Children to be granted to the parties, with care and control to the Wife and defined access to the Husband as set out in the Mediation Agreement dated 17 March 2017 and it was directed that the Children not to be removed from Hong Kong until they attain the age of 18 years respectively but provided that if either parent do give a general written undertaking to the Court to return the Children or either of them to Hong Kong when called upon to do so, and unless otherwise directed with the written consent of the other parent, that parent may remove the Children or either of them from Hong Kong for any period specified in such written consent;

(3) No order as to costs, including all costs reserved;

(4) The parties’ respective application for ancillary relief was set down for a FDR hearing on 2 June 2017;

(5) No order as to costs, including all costs reserved.

12.  The FDR was subsequently adjourned to 27 June,18 July 2017 and 17 October 2017 for a call over to enable discussions between the parties. Costs were reserved.

13.  In breach of the order dated 22 November 2016, the Husband failed to pay the interim maintenance for the Children. Further, in breach of his undertaking on the same date, he failed to pay the Children’s school fees for the academic year of 2016/2017. As a result, the Wife had to take out enforcement proceedings in the United States. The arrears of interim maintenance were garnished against the Husband’s retirement (401K) fund. However, the last 2 months of the school fees for the 2016/2017 academic years, in the amount of HK$47,364 is still outstanding. The Wife is seeking to recover this from the Husband.  

14.  On 6 September 2017, the Husband filed a Notice to Act in Person and has been unrepresented since then.

15.  The Husband failed to attend the hearing on 28 February 2018. At that hearing, the orders included, inter alia:

(1) Each party’s respective application for ancillary relief be adjourned to 8 June 2018 for a Pre-Trial Review;

(2) Both parties to personally attend the Pre-Trial Review;

(3) Both parties do file and exchange their updated Forms E within 28 days;

(4) Both parties do file and serve their narrative affirmations setting out their respective positions on ancillary relief within 28 days;

(5) Leave granted to each party to file and serve an affirmation in response to the narrative affirmation if so advised within 28 days thereafter;

(6) No further affirmations or questionnaires or other evidence to be filed without leave of the court;

16.  Not only did the Husband fail to appear at the hearing on 8 June 2018, yet again no updated Form E or narrative Affirmation were filed. The Court ordered, inter alia:

(1) The Wife’s application for ancillary relief to be set down for trial on 10 and 11 October 2018, with 2 days reserved;

(2) Another Pre-Trial Review before the trial court shall take place on 26 September 2018 with one hour reserved;

(3) The Husband do file and exchange his updated Form E and his narrative affirmation by reference to section 7 of the MPPO within 28 days;

(4) No other affirmation shall be filed without leave of court;

(5) Both parties do personally attend the net Pre-Trial Review on 26 September 2018 and the trial on 10 and 11 October 2018.

17.  The Husband again failed to attend the hearing on 26 September 2018. He also failed to comply with the order for the filing of his updated Form E ad narrative Affirmation. The Court ordered, inter alia:

(1) The Wife do have leave to file an affirmation to update the Court on the Children’s expenses within 7 days;

(2) The Husband do have leave to file his affirmation in reply if necessary within 7 days thereafter;

(3) Unless the Husband files and exchanges his updated Form E and his narrative affirmation by reference to section 7 of the Matrimonial Proceedings and property Ordinance (Cap.192) within 7 days, the Husband be debarred from adducing witness evidence at the Ancillary Relief Trial;

(4) No other affirmations shall be filed without leave of Court;

(5) Case be adjourned to 10 and 11 October 2018 for trial;

(6) Both Parties to attend.

18.  The Husband did not attend the trial. For the reasons set out below, the trial proceeded in his absence.

The Husband’s “Requests”

June 2018

19.  In about early June 2018, the Husband wrote to the Court [3A/172-173]:

“I [Name], now living in…USA write to request and inform the following:-

1. That I am unable to attend in person the pre-trial session on 08 June 2018 at 10:30 am. This is due to work unavoidable commitments and not being able to take time off.

2. That I am willing to participate via Skype, or other technology tools to participate in the pre-trial session(s). Alternatively, the Trial be rescheduled, per item 8 below.

3. That in the past 6-months, I have visited on 9 occasions and presented documents relating to the divorce proceedings under the FCMC 13675 case number, at the San Francisco District Court, as well as through the San Francisco Department of Child Social Services (DCSS).

4. The appearances at the San Francisco Court and San Francisco Child Services were instigated by the [Wife]’s application to pursue case FCMC 13675/2015 through the San Francisco Court jurisdiction.

5. A great deal was achieved and a Court ruling made, which included, agreement on:-

a. No need for wage garnishment as substantial proof of regular payments was agreed, and proven.

b. A 401k/Retirement interception was made by the DCSS for US$10,000 to pay for payment arrears claims by the [Wife].

c. Subsequently, the approximately US$5,000 of the US$10,000 was refunded by DCSS, and a further agreement made for no additional arrears claims able to be considered.

d. A tax refund of approximately US$12,500 dollars was coordinated willingly by the [Husband] and [Wife] and with the San Francisco Court’s help, agreed that US$7,500 of this refund be applied to [E’s] dental work for braces.

e. The remaining balance of the tax refund, approximately US$5,000 was agreed to be spent on the closing of a join-debt owed equally by both [the Wife] and [the Husband].

6. The San Francisco Court has now closed the case, albeit the DCSS have are able to reopen on the basis the existing Court Order not be honored by the [Husband].

7. Given the efforts involved in the above process and Court appearances described above, as well as a change in both the financial story, I have been unable to collate accurate supporting information to complete the Form E and J, which even as far back as 10-days ago, would have been immediately outdated.

8. That I’d like to propose the Trial is postponed and pushed out to early September or later. This will allow both parties to reconcile against the latest financial situation, or be able to mediate an agreement without Trial being necessary.

9. …

10. That I am not legally represented, and cannot qualify for Hong Kong Legal Aid. That I have a legal and mediation bill for over HK$210,000, that places me in correct debt., and with no way to currently afford to repay for these services…My initial affirmation and financials explain this situation in 2015/2016, and the status is since unchanged. Without this legal cost, circumstances for the children might have been different, especially tied to schooling costs – I write this to underscore the importance of cost in this case, and that it’s devastating impact on this family.

11. That the Hong Kong family Court consider this case be best and more easily trialed through the San Francisco District Court

20.  On 4 June 2018, the Court directed the Husband to approach the Wife’s solicitors for written consent regarding adjournment of the 8 June 2018 hearing [3A/171].

21.  On 6 June 2018, the Husband wrote to the Wife:

“Just for reference – see attached reply form the Court to my letter. OnceAgain, the process puts the onus onto you and I cooperating, or spending money on legal fees.

I’ve still not heard directly from the Court on any other specific points. Hope they’ve taken all items in the letter into account.

Again, hope you can simply agree with the proposed Court order, per yesterday’s message, and we move on form there. This is in the best interest of the children and provides a win-win solution.

Either way, postponement seems inevitable. There are no forms from my side and yours are out dated. You sent yours prior to outcome of SF Court, I held mine until the end of that process, because I knew that it would all change and be in conflict with the Court date in Hong Kong, thus my sending the updated Court order…

I’m saving you legal fees by not communicating directly with your legal team, but If your lawyers offer you more off-the-wall advice and decide I’m needed on Skype to meet the Judge tomorrow – please ask them to setup Skype or FaceTime and I’ll dial in. Please also confirm the time.

Otherwise, I look forward to getting a new hearing date and between now and then we can do the polka shuffle again, this time, hopefully to a sensible end…”

22.  The Husband’s last minute requests were rejected by the Wife.

23.  With respect to the Husband, his “requests” made no sense. In his letter to the Court, he stated that he was unable to attend the hearing on 8 June 2018 because of “work unavoidable commitments and not being able to take time off”. However, according to the offer letter of employment from his previous employers, the Husband was considered a participant of the “Highly Compensated Employee” (HCE) program. As such, he was eligible to take unlimited Paid Time Off (PTO) subject to prior authorization of his manager, his performance and performance priorities. In addition, he was entitled to “enhanced Leave of Absence benefits” [ 2B/504]. According to the offer letter from his current employers, the Husband is also entitled to paid time off [2C/645]. The 8 June 2018 hearing was fixed on 28 February 2018. In other words, the Husband had 3 months’ prior notice of the hearing. It is inconceivable that he was unable to arrange to take time off and for the Court to be only informed a few days before the hearing.

24.  In his letter to the Court, the Husband “proposed” that the Trial be postponed and “pushed out to early September or later”. However, in the last part of the same paragraph, the Husband stated that he hoped to be able to mediate an agreement without Trial being necessary [3A/173/§8]. It is evident that the Husband knew that no trial dates have yet been fixed at that stage. Further, according to paragraph 2 of his letter to the Court [3A/172], he clearly knew that the hearing on 8 June 2018 was a pre-trial review.

25.  The Court assumed that the Husband was asking for an adjournment of the Pre-Trial Review hearing. Firstly, the Husband was clearly in breach of the Order dated 28 February 2018. Not only was he allegedly unable to attend the hearing on 8 June 2018, no Form E or narrative Affirmation has been filed and he made no attempt to agree any directions for the proposed adjourned hearing. It was therefore unsurprising that the Wife refused to accede to his request. Further, despite the Wife’s refusal to an adjournment, no proper application was made by the Husband.

26.  The Husband did suggest attending the hearing on 8 June 2018 by “Skype or other technology tools”. At that time, the only possible digital means to conduct a hearing was by video link. Skpye or FaceTime are not acceptable. Video Conferencing hearings are governed by Practice Direction 29, which provides as follows:-

“2. Subject to the direction of the court or tribunal concerned, the Technology Court is available for use, where appropriate, upon the application of one or more of the parties in relation to proceedings or particular parts of proceedings, both civil and criminal, in the Court of Final Appeal, the Court of Appeal, the Court of First Instance, the Competition Tribunal, the District Court, the Lands Tribunal, the Magistrates’ Courts, the Coroner’s Court, the Labour Tribunal and the Small Claims Tribunal…

When the Technology Court should be used

4. It is a case management question within the discretion of the court or tribunal concerned whether any proceedings or parts of any proceedings should be conducted in the Technology Court.

5. In making its decision, the court or tribunal will take into account the views of all the parties, the availability of the Technology Court, the subject-matter of the proceedings or the relevant part of the proceedings and all other material circumstances, including in particular, whether the proposed use of the Technology Court is likely:-

(a) to promote the fair and efficient disposal of the proceedings;

(b) to save costs; and/or

(c) materially to delay disposal of the proceedings

Applications for use of the Technology Court

6. Before applying for use of the Technology Court, the party or parties wishing to apply should:-

(a) Consult the Judiciary website at http://www.judiciary.gov.hk to obtain all relevant, up to date information, or simply clink link below:

http://www.judiciary.gov.hk/en/crt services/tech crt.htm

(b) Make preliminary enquiries with the Clerk of Court in the High Court (contacting the Court Suite Manager…) as to the availability of the Technology Court over the period broadly covering the period broadly covering the likely hearing date or dates in question; and

(c ) Consult all other parties involved in such hearings.

7. Applications for use of the technology Court should be made to the court or tribunal in question as follows:-

Court or Tribunal	Apply to…
District Court	The judge in charge of the case; or if no judge is allocated, the listing judge. If unavailable, the Chief District Judge…

8. Applications for use of the Technology Court for any particular hearing or hearings should be made as early as practicable, bearing in mind:-

(a) the possible need to fix a hearing to consider any oppositions to the application; and,

(b) in the event of the application succeeding, the need to ensure that all necessary and proper technical and other arrangements are in place to ensure that the hearing is effective.

9. When applying for use of the Technology Court, the applicant should, inter alia, be prepared to:-

(a) identify the features of the proceedings or the particular issues or items of evidence making use of the Technology Court desirable;

(b) identify the particular facilities and equipment which it would wish to utilize in the Technology Court; and

(c ) provide an estimate of the court time needed.

Where the court or Tribunal directs use of the Technology Court

10. Where a court or tribunal…directs that the Technology Court is to be used, of no judge has yet been allocated to deal with the case in question, the court or tribunal should order that the case be allocated to a named judge or officer…,as far as such allocation may be practicable, so that the trial will in the normal course be fixed before such judge or officer ad, pending trial, any further interlocutory applications, including applications concerning use of the Technology Court, should be made to the same…

12. The day-to-day administration of the Technology Court is in the charge of the Clerk of Court in the High Court (COC) who is responsible for:-

(a) coordinating use of the Technology Court with the listing officers of the various courts or tribunals which may direct such use; and

(b) maintaining and providing technical support for the facilities and equipment installed in the Technology Court.

13. Where use of the Technology Court has been directed, the party having carriage of that order should at the same time be directed:-

(a) To apply within a stated period to the COC to fix a date or dates for the hearing or hearings in the Technology Court in consultation with the listing officer of the court or tribunal which gave the aforesaid direction;

(b) To contact and maintain such liaison with the Technology Court’s technical and other staff as may be required, with a view to ensuring that any equipment and materials provided by the parties or by commercial service providers engaged by the parties may compatibly and effectively be used together with the equipment installed in the Technology Court; and

(c) At a specified time prior to the hearing, to report back to the relevant court or tribunal as to the readiness of the parties to proceed with the hearing or hearings in the Technology Court...

At the hearing

15. The court or tribunal in question will, in the usual course, give such directions as it deems necessary in relation to the conduct of the hearing. It will generally be the responsibility of the party concerned to make all arrangements necessary for or incidental to ensuring that use of the Technology Court proceeds smoothly and effectively. For example, a party calling a witness who is to be examined on a Video Conferencing link will be responsible for ensuring that such witness will be at the remote site in good time for such examination to take place, having duly been supplied with copies of any documents or exhibits relevant to such examination and for the witness to be provided with an interpreter, if necessary, and so forth.

Cost of using the Technology Court

16.   Where facilities provided in the Technology Court are to be used in conjunction with services and/or materials provided by commercial entities (such as telecommunications carriers providing Video-Conferencing services or providers of real time court reporting and transcription services), it shall be the responsibility of each party wishing to avail himself of such services and/or materials to make appropriate contractual arrangements directly with such commercial entities and directly to meet their charges..”

13.  It is evident from the above provisions that an application has to be made to the Court for directions before the Technology Court can be made available. Applications are made by summons, to be supported by Affirmation. Applications are not made by correspondence or emails. No application for use of the Technology Court was ever made by the Husband in this case.

14.  Technology equipment is now available in the District Court. However, the equipment has to be set up by the technology team. The team of technicians are not housed in the Court building and their availability has to be ascertained. In addition, the applicant must provide the Court with a video-conferencing link. This link will be tested by the team of technicians prior to the date of the hearing in the presence of both parties’ representatives. Normally, the link is provided by lawyers or a video-conferencing centre in the foreign jurisdiction. From experience, the process of setting up a video-conferencing hearing in the District Court requires 2 to 4 weeks of advance notice. Because the Husband only asked for a digital hearing 4 days before the Pre-Trial Review, there was insufficient time to set up a digital hearing even if the Husband had taken out a proper application and complied with the Practice Direction.

15.  The Husband was clearly aware of his duty to file an updated Form E and narrative Affirmation. He appeared to suggest in his letter that his ability to file his updated Form E was hampered by the enforcement proceedings in the United States. This suggestion is wholly untenable.

16.  The Order dated 22 November 2016 was made by consent. He has all along known about his liability to pay interim maintenance. He was in breach of the order and yet he blamed the Wife for taking out enforcement proceedings. He also appears to blame the Wife for incurring costs. In fact, the divorce was uncontested and very little costs would have been incurred. The bulk of the costs arose out of the Husband own relocation application. Even then, it is clear from the chronology above that apart from a single order of “no order as to costs”, all costs have been reserved.

17.  The Husband has been acting in person since September 2017 and no further costs would have been incurred on his part in these proceedings. His liability for costs to his own solicitors would have crystallized by late 2017. According to the Husband’s letters, none of the legal or mediation costs have been paid. In paragraph 10 of his letter that his financial status has not changed since the 2015/2016 financial year. The Court notes that this is in direct contradiction to what he told the Wife on 6 June 2018. However, if what he told the Court were true, then there was no reason for his failure to file his updated Form E or narrative Affirmation.

18.  Despite the above, on 8 June 2018, the Court gave the Husband a second chance to attend the Pre-Trial Review and file his evidence. The 2^nd Pre-Trial Review hearing was fixed on 26 September 2018 because of the Husband’s indication in his letter that he would be available after early September 2018. By that time, the enforcement proceedings have been concluded and there was no reason why his updated Form E and narrative Affirmation could not be filed. Notwithstanding the Court’s accommodation, not only did the Husband fail to attend the 2^nd Pre-Trial Review hearing, again no documents were filed.

August 2018

19.  By a letter dated 27 June 2018, the Wife’s solicitors informed the Husband that the Wife “has no objection to your intended application to the court to attend the hearing on 26 September 2018 by way of video link, subject always to the Court’s direction” [3A/186].

20.  It was clear from the wording of that letter that an application has to be made to the Court by the Husband and was subject to the Court’s approval.

21.  The Husband replied on 28 June 2018, stating that he will inform the Court of the agreement [3A/188]. Despite that, the Court heard nothing from the Husband. No application for video-link facilities was made.

22.  The Court heard no further from the Husband until 30 August 2018, when he again wrote again:

“I… write to request and inform the following:-

1. As Petitioner, I’d like to withdraw my application for divorce, case number FCMC 13675/2015.

2. The withdrawal can be based on proviso that [the Wife] agrees to move the case – either by my opening the case, or through my opening of the case – and have the Court in San Francisco, CA, USA adjudicate the case.

3. This would be a seamless transition, and could be seen as an extension of the case already active through the San Francisco, California Court. This would also expedite the closure of the case, now over 3 years old.

4. Furthermore, the marriage between [the Husband] and [the Wife] was signed in California, and can then be more easily terminated in California, and be overseen and subject to California law.

5. That both [the Husband] and [the Wife] are both USA Citizens. This also adds to the justification for having this case resolved via the California Court.

6. The HK Court endorsement of the proposal in item 1, above – will help this case progress more quickly to resolution, and also allow both parties to reconcile against the latest true financial situation, or be able to mediate an agreement without HK Court Trial being necessary.

7. That the Court in SF are able to uphold the existing HK Court Order, which takes into account the current status of the adjudicated San Francisco Court agreement, as well as a generous proposal to increase the combined payments for both children’s maintenance and school education costs, is solid rationale in favor of both [the Wife], and [the Husband], and serves the long term best interest of the Children. Please refer to item 17a-e below.

8. That [the Husband’s] generous proposal to agree a new Court Order outside of Court has been shared most recently with [the Wife]…This exemplifies the need closure without delay, and this is something the CA Court system can provide, especially given the location of the [Husband]…

9. That I am not legally represented, and cannot qualify for Hong Kong Legal Aid also builds the case to have this case resolved in San Francisco, CA…

10. That I have a legal and mediation bill for over HK$210,000, which places me in extreme debt., and with no way to currently afford to repay for these services – which I might add have failed in their attempts even with the aid of mediation services. Legal proceedings have only increased the debt burden on this case for both [the Husband] and [the Wife], with no clear gain to either party, further supports a move of this case to be trialed in San Francisco, CA.

11. The HK Court should reconsider my initial affirmation from 2015, and its financials as part of the review of this case. The overall situation in 2015/2016 is since unchanged – the finances are tight, and custody is now remote, and not in-fitting with how the children’s lives interacted with mine or Mum’s, when in HKG. Without accrued legal cost, circumstances for the children might have been different, and improved especially tied to schooling costs – I write this to underscore the importance of finances in this case – the legal costs have had a devastating impact on this family.

11b- Should my proposal to move the place of adjudication to USA SF Court not be agreed – I will prefer to move forward to re-apply custody and overseas relocation of the children – as defined in my affirmation form 2016, this provides equal schooling, family stability and a superior financial outcome that serves all parties, including Mum. Something I’d rather avoid but I feel is necessary given the time this case has been open and unresolved, and especially tied to the gross and high risk financial circumstances that exist as a result of the elongated divorce proceeding.

12. That the Hong Kong family Court please consider agreeing this proposal, ad acknowledge that this case be better and more easily trialed through the San Francisco District Court. The HK Court would therefore agree with my withdrawal of the divorce Petition.

13. That I am unable to attend in-person the pre-trial session scheduled in September 2018. This is due to work unavoidable commitments and not being able to take time off, and affordability.

14. That I am willing to participate via Skype, or other technology tools to participate in the pre-trial session(s). Alternatively, the Trial be rescheduled, per item 13 above. For this pre-trial agreement, the [Wife] and her legal team have since agreed to my participation via remote link.

15. That in the past 9 months I have visited on more than 12 occasions and presented documents relating to the divorce proceedings under the FCMC 13675 case number, at the San Francisco District Court, as well as through the San Francisco Department of Child Social Services (DCSS).

16. The appearances at the San Francisco Court and San Francisco Department of Child Social Services were instigated by the [Wife’s] application to pursue case FCMC 13675/2015 through the San Francisco Court jurisdiction.

17. A great deal was achieved and a Court ruling made, which included, agreement on:-

a. No need for wage garnishment as substantial roof of regular payments was agreed, and proven,

b. A 401k/Retirement interception was made by the DCSS for US$10,000 to pay for payment arrears claims by the [Wife].

c. Subsequently, the approximately US$5,000 of the US$10,000 was refunded by DCSS and a further agreement made for no additional arrears claims able to be considered.

d. A tax refund of approximately US$12,500 dollars was coordinated willingly by the [Husband] and [Wife] and with the San Francisco Court’s help, agreed that US$7,500 of this refund be applied to [E’s] dental work for braces.

e. The remaining balance of the tax refund, approximately US$5,000 was agreed to be spent on the closing of a join-debt owed equally by both [the Wife] and [the Husband

18. The San Francisco Court has now closed the recent proceedings, albeit the DCSS have are able to reopen on the basis the existing Court Order not be honored by the [Husband].

19. Not that subsequent to the agreement with the SF Court, US IRS declined the full refund amount applied in our tax filing documents. The [Wife] was working with them to better understand why this occurred. To date, no resolution exists.

20. Given the efforts involved in the above described processes and Court appearances, as well as a change in both the financial story of this case, I have been unable to collate accurate supporting information to complete the Form E and J, which even as far back as 2-months ago, would have been immediately outdated.

21. The Children remain extremely happy with their visits to see me, and are well and very safely cared for. The HK Court order payments have been honored since the order was made, and investment in the children beyond the Court order is well documented, as shared with the San Francisco, CA court this year.

22.  The HKG Court should consider to agree to the proposal to move the case to a USA jurisdiction and have further trials be conducted through the San Francisco District Court. The SF Court can uphold any HKG Court Order in place, including any new order agreeing to the proposed sum described above,”

Adjournment/Hearing by Video-link

23.  It was unclear from the Husband’s letter whether he wanted to ask for an adjournment of the Pre-Trial review or the Trial. It seems that he was asking to attend the Pre-Trial Review hearing by video link. Again, he made no application or arrangements in accordance with Practice Direction 29 for the hearing to be conducted by video-link.

24.  The Court has already accommodated his previous request by fixing a hearing date after early September 2018. The Husband was given over 3 months’ notice of the hearing and yet he still says he was unable to attend. He says that he had work commitments and was unable to afford coming to Hong Kong. His purported reasons have been proven to be untrue by reason of the matters referred to below. In continuous breach of previous orders, no updated Form E has been filed for the Court to consider his financial situation.

25.  Trial dates are milestone dates, which are not to be moved without very cogent reasons. If he was asking for an adjournment of the Trial, no reasonable explanation was given. In fact, the Husband subsequently demonstrated that he could have taken time off and could financially the trip to Hong Kong. 

Withdrawal of Proceedings

26.  The Husband informed the Court that he would like to withdraw these proceedings.

27.  For matrimonial proceedings, a petitioner may file a notice of discontinuance before the petition is served [See section 7 of the Matrimonial Causes Rules]. Otherwise, leave is required for withdrawal. Yet, no application from the Husband was forthcoming.

Transfer

28.  In both is letters dated June and August 2018, the Husband has suggested a transfer of these proceedings to San Francisco, where he is now living. He appears to be confused as to the nature of the proceedings in the United States. Those were enforcement proceedings taken out by the Wife. The sole question for the San Francisco Court was enforcement of the orders of the Hong Kong Court.

29.  There is no procedure for the transfer of these proceedings to the San Francisco Court. If the Husband wishes to proceed in San Francisco, he has to apply to this Court for leave to withdraw the proceedings. Contrary to what the Husband appears to believe, there can be no “smooth transition” or extension of the ancillary relief trial in the San Francisco Court. If leave were granted for him to withdraw these proceedings, he will have to take out fresh proceedings in San Francisco. In other words, these proceedings will have to start again from square one.

30.  In addition, if leave to withdraw were granted, the Husband would normally have to bear all of the Wife’s legal costs so far incurred in these proceedings. It is difficult to see how such a course would help either of the parties to save any costs.

31.  The Husband clearly knew this as he filed divorce proceedings in San Francisco on 5 December 2018 under Case Number FDI-XX-XX842 (the US Proceedings).

Forum Conveniens

32.   The Husband appears to be suggesting that San Francisco is the proper forum for these proceedings. He was the Petitioner. He chose to commence proceedings in this Court. There is no room for him to argue forum conveniens.

33.  By reason of the above mentioned matters, the 2^nd Pre-Trial Review hearing proceeded in the Husband’s absence. The Husband was ordered to file and exchange his updated Form E and narrative Affirmation in February 2018. He has had 7 months and yet no documents have been filed. In those circumstances, the Court made the following orders:-

(1) The [Wife] do have leave to file an affirmation t update on the Children’s expenses within 7 days;

(2) The [Husband] to have leave to file his affirmation in reply if necessary within 7 days thereafter;

(3) Unless the [Husband] files ad exchanges his updated Form E and his narrative affirmation by reference to section 7 of the Matrimonial Proceedings and Property Ordinance (Cap.192) within 7 days from the date hereof, the [Husband] be debarred from adducing witness evidence at the ancillary trial;

(4) No other affirmations shall be filed without leave of the Court;

(5) Costs reserved;

(6) …

(7) Case be adjourned to 10 and 11 October 2018 …

(8) Both parties to attend.

34.  On 2 October 2018, the Court wrote back to the Husband, making it clear that applications should be made by way of summons and no unilateral requests by email would be entertained. The Husband was also urged to seek independent legal advice.

35.  On 10 October 2018 (i.e. the first day of trial), the Husband called the Court clerk. He told the clerk that he was ready to attend trial, that he was unable to attend trial in person and again demanded to participate by phone.

36.  The Husband bears the burden of making arrangements to attend the hearing by video-link. He clearly knew that applications have to be made by filing a summons and supporting affirmation. He filed a summons for relocation when he was acting in person. The Court has already told him in no uncertain terms that “requests” by letter or email would not be entertained. Yet no application was made, no arrangement for the use of equipment was made and no video-link has been given to the Court.

37.  The Husband subsequently told the clerk that he will not attend the trial. In fact, in his letters, the Husband has only requested to attend the Pre-Trial review hearings by Skype or other technology means. Those letters did not even include any request to attend trial by digital means. 

38.  The Husband knew from February 2018 that trial dates were fixed for 10 and 11 October 2018. It was incredible that he could not make arrangements to attend the hearing. In fact, on 22 September 2018, he wrote an email to the Wife, stating that he was “…hoping and likely to be in HK to see E’s triathlon on 21 October [2018]. Much depends on your agreement to attending Court trails [sic] dates – I’d rather not be there in person for 10-11 Oct” [3A/59/269]. It was clear from this email that he was able to take time off work and afford the trip to Hong Kong. In fact, the Husband came to Hong Kong in October 2018 and had access with the Children on 17 to 19 October 2018. He failure to appear was deliberate.   

39.  In breach of the above mentioned orders, the Husband failed to file his updated Form E or narrative affirmation within the stipulated time (i.e. on or before 3 October 2018). He provided some financial information to the Court by way of a letter dated 30 August 2018 but the same was not provided to the Wife’s solicitors until 18 September 2018 [3A/58]. The Form E enclosed in the Husband’s letter was incomplete and unsworn. On 4 October 2018, the Husband provided additional financial documents [3B/313-520] without leave.

40.  In all the circumstances, the Court proceeded with the trial in the Husband’s absence. However, since he was absent, the Court ensured that the Husband was given a transcript of the trial to enable him to make final submissions.

41.  On 15 February 2019, the Wife obtained an ex parte injunction restraining the Husband from proceedings on the divorce proceedings in Sa Francisco. A return date was fixed for 1 March 2019 and the order was endorsed with a penal notice. The Court ordered the injunction to stand on 1 March 2019.

42.  The hearing of the Wife’s application for ancillary relief for the Children resumed on 3 June 2019 for closing submissions. The Husband filed a written submission but failed to attend the hearing.

Issues

43.  The Wife is not asking for any form of ancillary relief for her own benefit. She is only asking for maintenance for the Children. In her submissions, the Wife also asked the Court to deal with arrears of maintenance. The Court is not certain what the Wife means by arrears of maintenance. If she means the arrears of interim maintenance, there is a specific procedure for enforcement. It is wholly inappropriate for the Court to deal with that in this Trial. If the Wife is asking the Court to back-date the order to the date of her ancillary relief application, that is a matter within the Court’s discretion.

44.  The main issues at trial are:

(1) The Children’s reasonable needs;

(2) Whether the Husband has the ability to pay;

(3) Whether the order for payment be backdated to the date of the application for ancillary relief;

(4) The Husband’s litigation conduct and how this (if any) should be reflected in the costs orders.

Applicable Legal Principles

45.  Claims for maintenance for Children are governed by section 5 of the MPPO, which provides as follows:-

“Financial provision for child of the family in cases of divorce, etc

(1) Subject to the provisions of section 10, in proceedings for divorce, nullity of marriage or judicial separation, the court may make any one or more of the orders mentioned in subsection (2) –

(a) Before or on granting the decree of divorce, of nullity of marriage or of judicial separation, as the case may be, or at any time thereafter;

(b) Where any such proceedings are dismissed after the beginning of the trial, either forthwith or within a reasonable period after the dismissal.

(2) The orders referred to in subsection (1) are –

(a) An order that a party to the marriage shall make to such person as may be specified in the order for the benefit of a child f the family, or to such a child, such periodical payments and for such term as may be so specified;

(b) An order that a party to the marriage shall secure to such person as may be so specified for the benefit of such a child, or to such a child, to the satisfaction of the court, such periodical payments and for such term as may be s specified;

(c) An order that a party to the marriage pay to such person as may be s specified for the benefit of such a child, or to such a child, such lump sum as may be so specified.

(3) Without prejudice to the generality of subsection 2(c), an order under this section for the payment of a lump sum to any person for the benefit of a child of the family, or to such a child, may be made for the purpose of enabling any liabilities or expenses reasonably incurred by or for the benefit of that child before the making of an application for an order under this section to be met.

(4)   An order under this section for the payment of a lump sum may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court…”

46.  Matters to which the Court is to have regard in respect of such applications are set out in section 7 of the same Ordinance. In respect of maintenance for children, Section 7(2) provides:-

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

(a) The financial needs of the child;

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

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

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

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

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

47.  The sole test for periodical payments is “reasonableness”. This is measured against the standard of living during the marriage. This is of course, subject to the payer’s ability to pay must also be considered.

48.  In respect of the parties’ respective contribution towards the Children’s expenses, Her Honour Judge Melloy said the following in MMM v OCC [2016] HKEC 2842:

“…The remainder, being costs associated with the children, should be split between the husband and wife in an equitable manner. On occasion, this may be 50:50- or alternatively it can be a percentage based on the relative earnings of each party, or simply a reasonable amount in the circumstances.”

49.  This was reiterated by the learned judge in KS v YP FCMC 2649/2016:

“It is generally understood, when considering the issue of maintenance for children, that both the children’s direct and indirect expenses should be shared between the parties in an equitable way. The appropriate amount is generally based on the financial resources of each party. On occasion this may be a 50:50 basis – especially if the parties are earning a similar amount. Alternatively, it may be a percentage based on the relative earnings of each party, or simply a reasonable amount in the circumstances.”

50.  In order for the Court to come to a fair decision, both parties are under a duty to make full and frank disclosure of their financial information. If a party were to fail to make full and frank disclosure, the Court will adopt a robust approach and draw adverse inferences against his or her ability to pay.

The Evidence

The Wife’s Income, Assets and Liabilities

51.  The Wife is now 48 years old. She received a Bachelor Degree in Communications from a University in the United States in 1994. She now has a new partner (A) who has moved into the FMH to live with her and the 2 Children. A is making a contribution of HK$15,000 per month towards his share of the rental, the domestic helper and household expenses.

52.  The Wife has been employed by the school where the Children are studying for a number of years. She is now a Communications Manager at the school [1B/412], and her net monthly salary is HKHK$46,325 (i.e. salary of HK$47,625 less HK$1,500 for MPF contribution) [R1].

53.  The Wife is a support staff (as opposed to teaching staff) at the school and is not entitled to gratuity, housing allowance or subsidy.  Paragraph 4.3.1 of her Condition of Service [2B/352] provides as follows:

“Rent Reimbursement Scheme

4.3.1 A Staff member employed full-time shall be eligible, provided he fulfils the conditions set out in this section, to apply for the amount of his monthly salary be reduced and an equivalent sum to be substituted as reimbursement of rent paid by him in respect of a lease or rental agreement for a residential property occupied by him (excluding any other miscellaneous charges such as management fee, rates, car-parking, etc…”

54.  Apart from her monthly income and according to her updated Form E filed on 28 March 2018, the Wife had HK$129,135.47 in her bank accounts. She also had a sum of HK$268,348.06 in her MPF account and the equivalent of HK$32,459.77 (i.e. US$4,156.18) in her Fidelity RA Rollover account. These will not be available until she reaches retirement age. Her liabilities amounted to HK$566,381.22. The bulk of her liability in the amount of HK$341,138, is made up of personal loans from the Wife’s father and A to pay for the school fees and other expenses of the Children. The next largest item of liability in the sum of HK$128,804.70 are outstanding legal fees [1B/425].  Originally, she had agreed to repay the legal fees by instalments of HK$10,000 per month. She was unable to cope with the repayments and the monthly instalments were reduced to HK$8,000 per month at the time of the trial.

The Wife’s Monthly Expenditure

55.  According to the Wife’s evidence, her monthly general household expenditure is HK$36,238. This consists of rental of the FMH, utilities, food, household expenses and domestic helper. She says her share of the household expenses is HK$12,079.33 (i.e. HK$36,238/3) whilst the Children’s share is HK$24,158.67.

56.  The current rental of the FMH is HK$28,500 [2D/1015]. Because the Wife’s partner, A is now living with her, he is contributing towards a quarter of the rent, thereby reducing the Wife’s payment of rental to HK$21,375 per month.

57.  The Wife spends around HK$2,885 per month on utilities [1B/429]. This is calculated on a 4-person household basis. After taking A’s quarter share into account, the Wife’s share is HK$2,163.75. Since electricity, gas and water were treated by the Wife as household expenses, the Court will assume that “utilities” mean soap, shampoo, detergent, cleaning utensils and general repairs.

58.  The Wife says that household expenses for herself and the Children includes electricity, gas, water, Now TV (which is now cancelled) and internet expenses amount to HK$3,900 per month.

59.  The Wife has a full time domestic helper, whose monthly salary is HK$6,000. The Wife pays HK$3,800 and the remainder is paid by A.

60.  The Wife’s personal expenses are approximately HK$15,000, i.e. living expenses of HK$7,000 per month [1B/429/§24] and HK$8,000 per month towards overdue legal fees.

Reasonable Monthly Expenditure for the Children

61.  From the outset, the Husband made it clear that the accommodation and education expenses are disputed.

62.  As explained above, the reasonableness of the expenditure is considered by reference to the standard of living during the marriage. This does not mean to say that the previous standard of living will necessarily be replicated. The Court also has to consider the Husband’s ability to pay.

63.  The standard of living during the marriage does not appear to be in dispute. The family has been living in the FMH since 2010. This is an apartment of just over 1,000 sq. ft. with three bedrooms. The family would routinely travel and have at least 1 short-haul trip in Asia and 1 long-haul trip to the United States each year [1A/432/§12]. The Husband describes the previous standard of living as “2x long weekend trips per annum, resident/private club access, 2 international vacations per annum, domestic helper f/t, dinners outside family home, sinner dates, savings plans, sports program enrolment, frequent attendance at musicals, plays and concerts” [1B/351/§17].

Accommodation

64.  Throughout these proceedings, the Husband has argued that they are no longer able to afford the rental of the FMH. He has asked the Wife and the Children to move to more affordable accommodation. He suggested a rental of about HK$20,000 per month would be reasonable [1A/35/§2]. Firstly, the Wife has the daily care of the Children, who are teenagers of opposite genders. Even if A were to be disregarded, this is a 3-member household.

65.  The Wife’s rental is HK$28,500 per month. On the other hand, the Husband is allegedly living alone in rented premises with rental of HK$19,578 per month. In his closing submission, he says that his rent “is fair and reasonable and accommodates the children in a safe and secure location…A reduction proposed on 25% is a ridiculous ask given San Francisco is one of the most expensive cities to live in the world…” [Husband’s closing submission §24]. The Children’s home is in Hong Kong. The Husband has spent very little time with them since he moved to the United States. Upon comparison with the Husband’s rental, the Wife’s rental is more than reasonable.

66.  In any event, A has now moved in with the Wife and is contributing to a quarter of the rental of the FMH, thereby reducing the Wife’s payment of rental to HK$21,500 per month, which is close to what the Husband has suggested.

67.  In the light of the above, the Wife’s rental expenses are reasonable.

Education

68.  All along, the Children have been studying in the same international school. They are on an IB program in this school. Apart from Mathematics, they were doing very well at school. The school has already arranged for assistance with the Mathematics [1A/82-83]. In the initial stages of these proceedings, the Husband applied for relocation of the Children. During that application, he also suggested a change of schools to a local school. However, he subsequently withdrew those applications. It appears that he accepted that it was reasonable for the Children to remain in the same school.

69.  In his letters and closing submissions, the Husband has again suggested relocation on the ground that education in the United States is more affordable. He cannot revive his application by correspondence or submission. The Husband knew that he has to apply for relocation by summons. He previously issued a similar summons when he was unrepresented. No such application has been made.

70.  By reason of the above, the education expenses of the Children are reasonable.

71.  When the Husband withdrew his relocation application, he undertook to pay for the Children’s school fees for the year 2016/2017. According to the Wife, the Husband is in breach of that undertaking. He also failed to pay the interim maintenance pursuant to the Order dated 30 August 2016 [1A/002]. The Wife had to take out enforcement proceedings in San Francisco. The arrears of interim maintenance were eventually paid but the last 2 months of school fees for the 2016/2017 academic year in the amount of HK$47,364 is still outstanding.

72.  Because the Husband was not paying for the school fees and the building levy, the Wife has had to apply for financial aid from the school since 2017. Applications have to be made every year and there is no guarantee that it would be granted. Even if granted, the financial aid is provided on a decreasing scale. The Children received 100% financial aid for the 2017/2018 academic year and 80% financial aid for the 2018/2019 academic year. In other words, for the 2018/2019 academic year, the total school fees and building levy for each Child was HK$2,851.50 per month [R5]. A total of HK$68,436 was paid by the Wife.

73.  For the 2019/2020 academic year, the school has projected that the school fees will be increased by a further 6%. Unless financial aid is again given, the Children’s school fees and building levy will be HK$30,242 per month [1A/306/§15].

Other Expenses

74.  As stated above, the Husband has been given repeated opportunities to file his narrative affirmation, where he can set out his resources and needs, as well as clarify his stance on the Wife’s claims. In breach of the Orders, he has failed to file any narrative affirmation. However, in his closing submissions, he challenges the Wife’s alleged household expenses for the very first time. In paragraph 16 of his closing submissions, the Husband says that “it makes clear that [the Wife’s] evidence on page 8, item 32, shows hugely overstated costs]. He did not specify which expenditure was in dispute.

75.  This is in stark contradiction to what the Husband said in his 1^st affirmation [1A/34]. In that Affirmation, under the title “Finance Deficit”, he stated that “income versus outgoings in the past 3-years has seen a significant imbalance and [the Husband/the §financial solvency. [The Wife] claims a deficit of between $10-12,000 per month. [The Husband] claims a deficit of $2,500 per month…’. The Wife’ denies that she had a monthly deficit of HK$10,000 to HK$12,000 per month. She stated that they were living within their means. In other words, it was the Husband’s case that the parties’ entire earnings were spent on family expenses. At the time, the Husband was earning over HK$90,000 per month [1B/347]. The Wife was earning just over HK$44,000 per month [1B/375]. If what the Husband stated were true, the family expenditure was between HK$146,500 and HK$148,500 per month (i.e. HK$90,000 + HK$44,000 + HK$10,000/HK$12,000 + HK$2,500]. The Wife’s current total expenditure (inclusive of full scale school fees and building levy) only amount to HK$73,274 (i.e. general household expenses HK$36,238 + HK$15,000 personal expenses + children’s expenses exclusive of school fees HK$22,036 with financial aid at 80% [The Wife’s closing submissions §§32-35, 39].

76.  The Wife lives with 2 teenage Children. He contribution to the rental is HK$21,375. The Husband lives alone but his rental is HK$19,578. The Wife spends HK$2,885 on utilities for herself and the Children, whilst the Husband’s utilities for a one-person household is HK$2,802. The Wife’s food expenses at home for a 3-person household is HK$5,000 whilst the Husband spends the same amount on himself. The Wife’s contribution towards the domestic helper is HK$3,800 for herself and the Children whilst the Husband spends HK1,298 for a one-person household.

77.  By reason of the above mentioned matters, it is difficult to see how the Wife’s expenditure could be said to be overstated or exaggerated.

78.  In my Judgment, the Children’s reasonable needs are HK$40,195 exclusive of school fees (i.e. HK$24,159 as general household expenses + HK$16,335 as Children’s expenses) to HK$46,195.50 inclusive of school fees with 80% financial aid (HK$24,159 as general household expenses + HK$22,036.50 as the Children’s expenses).

Husband’s Income, Assets and Liabilities

Disclosure

79.  As explained above, both parties have a duty to make full and frank disclosure of their finances. The duty is explained in Rayden & Jackson on Divorce and Family Matters 18^th Edition at paragraph 17.28:

“Duty of disclosure must be full, frank, clear and up to date

17.28 The importance of the duty of both husband and wife to make disclosure of their assets which is full, frank and clear cannot be overemphasized. Unless a court is provided with correct, complete and up-to-date information on the matters to which, under s.25 of the MCA 1973 (equivalent to section 7 of the MPPO), it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that section. The duty on each party is absolute, and it must be discharged regardless of whether the application for ancillary relief is adjudicated upon by the court after full evidence has been heard, or settled after an exchange of financial information between the parties leading to a consent order. The duty is also a continuing one; a party must not mislead the other party and the court into assuming that his financial situation is unchanged if it in fact has changed. Any material changes in the financial situation of either party occurring between the filing of their Form Es and the final dispatch of the claims by the courts must be brought to the notice of the other party and the court at the earliest opportunity. A party who seeks to negotiate and secure a settlement without informing the other party about a material change in his or her financial circumstances runs the risk that, if a settlement is reached and a consent order is made, the consent order will be set aside by the failure to provide dull, frank and timely disclosure. Shortcomings in disclosure will be visited by orders for costs against the offending party, often on the indemnity basis. Furthermore, deviation from the standard od disclosure, required may be visited by the court drawing adverse inferences against the party in default” (my emphasis)

80.  The Husband has failed to comply with various orders (including an unless order) under which he was required to file and serve an updated Form E. Since the Husband was in breach of the unless order, he was debarred from producing any evidence. He then purported to “file” his unsworn updated Form E without leave. The Court is entitled to ignore those documents. Even if the Court were to take those documents in account, his disclosure of financial information was piecemeal and incomplete. His purported disclosure was described by the Wife as “an information dump”, meaning that he has simply provided a bundle of documents with no explanation whatsoever, leaving the Court and the Wife to search for information and work out his financial circumstances. It is trite law that provision of information in this manner is no disclosure at all. 

81.  In his letters to the Court, the Husband alleged that his financial situation was unchanged since 2015. This was clearly untrue. In 2015, the Husband was still living and working in Hong Kong. By the time of the trial, he had relocated to San Francisco and had different employment. It was his case in the relocation application that employment in the United States would produce a higher net income.

82.  The entire Part 1 of the Husband’s purported updated Form E was missing. In other words, he has not told the Court whether he was employed, where he was working, his previous income, whether he was living with anyone or intended to live with anyone within the next 6 months. This Form E was unsworn and the Husband deliberately chose not to attend Court to be cross-examined. No documents were attached to this Form E. It is next to impossible for the Court to place any weight on this document.

83.  The Husband’s case in respect of his income is very inconsistent. He has given the Court a number of different and wide-ranging figures in his letters. According to the documents provided by the Husband, he is now working as a Regional Project Director at a company called CWUS. According to the offer letter dated 21 August 2017 [3B/391], his annualized salary was US$170,000 and is paid in bi-weekly instalments. He is also entitled to a discretionary bonus award of 20% of his base salary.

84.  On 21 March 2018, the Wife asked the Husband about his bonus. This was followed by a letter from the Wife’s solicitors on 28 March 2018 with the same request. The Husband never provided an answer [1A/225, 257, 258].

85.  In his purported updated Form E, he stated that his monthly income is the equivalent of HK$120,000 [3A/207], (i.e. a base salary of HK$108,000 and a bonus of HK$12,000) per month.

86.  Initially, the Husband failed to provide any pay slips which were required by Form E. A total of 4 salary slips were subsequently and reluctantly produced pursuant to the Wife’s requests. The latest pay slip for the period between 10 September to 23 September 2018 [3B/433] shows that the Husband is paid US$ 6,538.46 biweekly (i.e. an annual salary of US$ 170,000).  The Husband also pays US$784.62 biweekly into his 401k/retirement fund. This is not a mandatory contribution.

87.  As at 23 September 2018, the total amount of tax paid was US$53,192.84. In other words, the Husband’s net income as at 23 September 2018 was US$100,937.94.

88.  According to the Wife, the payment on 23 September 2018 should be the 19^th payment by CWUS to the Husband in 2018. According to those figures, the Husband’s net income (net of all deductions and tax) is HK$90,126.96 per month. If the Husband were to cease his contributions towards the 401K fund, he would have an additional HK$13,311.08 per month. This means that his monthly net income will be increased to HK$103,311.08.

89.  The Husband’s disclosure of bank accounts was evidently wrong [3B/200]. The HSBC Current Savings account number he provided (i.e. xxxx xxxx 8633) was in fact his Visa Card number. The Wife also discovered that there were a number of undisclosed bank and credit card accounts, namely:

(1) BOA account number xxxx xxxx 9651 and xxxx xxxx 9489 [3B/440];

(2) BOA credit card number xxxx xxxx xxxx 0999 [3B/507];

(3) HSBC Current and Savings account number xxx-xxxxxx-833 [3B/507]

90.  The Husband has not provided any evidence in respect of a BOA account xxxx xxxx xxxx 0241. He stated at the Summary of Part 2 of his purported updated Form E that his interest in his bank account as at 30 August 2018 was HK$ 0. As at 14 September 2018, he had US$ 3,998.65 in his BOA account [3B/483]. He also had HK$2,690.78 in his HSBC xxx-xxxxxx-833 account [3B/519].

91.  In his first Form E filed on 27 September 2016, the Husband admitted that he had a MPF account with a current value of HK$120,000 [1B/344].  The Wife asked about the whereabouts of the MPF funds in a Questionnaire. In his Answer dated 23 December 2016:

“Of the ‘MPF Mandatory’

6.1 The [Husband] has failed to provide any documentary evidence such as a recent statement for this MPF account. Please provide documentary evidence of the latest balance.

Answer: An updated copy will be provided once the [Husband’s] previous employed settles the final payment to the [Husband] in January 2017.

6.2 Please confirm whether the balance of the MPF Mandatory will be received by the [Husband] upon leaving Hong Kong permanently as allowed by the Government of the Hong Kong SAR in such circumstances.

Answer: The [Husband] is still finalizing the last payment from his previous employer and has not considered this option yet”

92.  In his purported updated Form E, there is no longer a MPF account [3A/204]. There has been no explanation to the Court as to the whereabouts of these funds. In correspondence, the Husband stated through his solicitors that the bulk of his MPF payout had been used to repay credit card debts of over HK$220,000 that he ran up for his own entertainment over a period of 6 months. He was asked to explain the whereabouts of the remaining HK$88,853.89 [3A/43]. This was not answered [3A/49]. 

93.  In his purported Form E, the only valuable personal items disclosed were wedding rings estimated to be worth HK$20,000 [3A/202]. There was no mention of a car. Yet, in the same Form E, the Husband says that he incurs HK$4,788 on car expenses and transportation [3A/209]. In fact, the Husband’s previous solicitors admitted that he had purchased a car in the United States in correspondence [3A/49].

94.  In his purported updated Form E, the Husband alleged that he spends an average of HK$31,714 on the Children each month [3A/210]. In fact, in 2017, the Husband only spent a total of 44 days with the Children. According to his closing submissions, apart from the interim maintenance, the Husband only paid for E’s boxing lessons at HK$3,000 per quarter and digital devices of US$2,500. Not only was this not in the form of an Affirmation, it is a bare allegation wholly unsupported by evidence.  The assertion that he spends an average of over HK$30,000 on the Children each month is clearly untrue. 

95.  The Husband’s entertainment expenses at HK$11,500 were criticized by the Wife. The Husband argued that:

“Entertainment & Presents – this cost represents travel for the children, as stated in my Form E. There is nowhere else to list this expense, so it’s being misinterpreted conveniently by [the Wife’s solicitors], again showing their inconsistency in capturing the math of this story”

96.  The Husband’s assertion is evidently untrue. Apart from entertainment and presents at HK$11,500, he also claimed that he had the following expenditure in his purported updated Form E:

“Current Monthly Expenses

Personal
Item	Amount
Holiday	$1,000
Children
Item	Amount
Holidays	$2,000
Other Transport
Flight for CDR visit	$25,939

97.  The assertion that the costs of access visits to the United States were not included elsewhere in the Form E was an attempt to mislead the Court. The Wife says that the Husband has refused to pay for the Children’s flight from Hong Kong to San Francisco. The Wife’s parents have had to subsidize the trip. The Husband only paid for the air fares from Oregon to San Francisco which costs US$200. Despite being given a chance to reply to the Wife’s Affirmation, the Husband filed no evidence. The Wife’s evidence on air fares was unchallenged. 

98.  The Husband has consistently alleged that the risk of loss of employment was very high. He stated that he was terminated from his position by his previous employer in Hong Kong. This is disputed by the Wife. She says that he resigned of his own accord to find better employment in the United States. In fact, the Husband secured a better position in the United States prior to his relocation. This was the basis of his relocation application. Although he has changed employment since then, there was no suggestion or evidence that he had difficulty finding alternative employment. In fact, his income has only increased through the years.

99.  According to the Wife, the Husband received a tax refund from the IRS in the United States. He has kept all of it but this was never disclosed by the Husband.

100.  The Husband has clearly failed to make full, frank and clear disclosure. The Court will draw adverse inferences against his ability to pay.

101.  The Husband also accuses that the Wife is guilty of non-disclosure. She is now living with her new partner, A, in the FMH. She is obliged to disclose his assets and income. However, in her updated Form E, her answer to the relevant questions was “none” [1B/433]. 

102.  Paragraph 18.22 of Rayden & Jackson on Divorce and Family Matters has the following to say about cohabitation with a new partner:

“If a wife cohabits with another man that is not necessarily a reason for reducing or terminating her maintenance as cohabitation is not to be equated with re-marriage. There is no statutory requirement that the court should give decisive weight to the fact of cohabitation. If the court were to do so, it would impose an unjustified fetter on the freedom of an ex-wife to lead her own life as she chooses following a divorce. Cohabitation is relevant in so far as it results in some diminution of the wife’s needs, either on account of financial support given by her cohabitee, or because it was simply cheaper for people to live together in a joint household rather than to live separately…”

103.  The Husband argued that because A is now living with the Wife in the FMH and is acting like a parent towards the Children, A should be responsible for at least 50% of the household expenses.

104.  In KEWS v NCHC [2013] HKCFA 1. In dismissing the Husband’s appeal, the Court held:

(1) For the purposes of considering an application for ancillary relief under s.4 of the Matrimonial Proceedings and Property Ordinance, the court was guided only by s.7(1), in particular s.7(1)(a). The width and wording of s.7(1)(a) included financial assistance made by third parties to the parties of a marriage and accordingly this could be taken into account in the computation of that party’s overall financial resources. In every case where this was involved, the two critical evidential questions for the court were: (a) the extent of the financial assistance provided by the third party to the husband and wife; and (b) the likelihood of such assistance continuing in the foreseeable future;

(2) The court had to look at the reality of the situation and have regard to matters of substance and not just form. In looking at reality, it could take into account not only what a party actually had, but what might reasonably be made available to him or her if a request for assistance were to be made. As to what might occur in the foreseeable future, part conduct was often a useful guide;

(3) Having ascertained the extent of the third party financial assistance and then finding on the evidence of probabilities that there was a likelihood of the continuation of such assistance in the foreseeable future, the court was then in a position in law first, to take this into account in the identification of the financial resources of the parties and second, in determining the appropriate ancillary relief to be granted. This approach was entirely consistent with the court’s duty under s.7(1);

Concept of “judicious encouragement”

(4) The concept of “judicious encouragement”, which might be taken to mean that the court could encourage third parties to provide financial assistance, had led to confusion among judges and practitioners. If its true ambit was really no more than a restatement of the proper approach as set out above, there was no difficulty. However, if it meant a form of pressure on non-parties to add to the relevant spouse’s resources which, on the evidence they would not do or were unlikely to do, the concept should be rejected. Such approach was consistent neither with principle nor with the authorities. It was better of the term “judicious encouragement” were no longer to be used.

105.  In the present case, the Wife has disclosed that A has been contributing HK$15,000 per month. However, this was paid by A towards his own share of the rent and household expenses, and not for her support or the support of the Children. A has no legal duty to provide for the Children nor is there any evidence that he has been providing for them. In those circumstances, the 2 critical evidential questions set out in the KEWS case have not been satisfied. 

The Husband’s Ability to Pay

106.  The Husband’s case on his income is very inconsistent. He provides the Court with a different figure in each of his letters.

107.  According to the offer letter of employment dated 21 August 2017, the Husband’s annualized salary was US$ 170,000 and is paid in bi-weekly instalments. He was also entitled to a discretionary annual bonus award of 20% of his base salary [3B/391]. According to his purported updated Form E, his average monthly income is HK$120,000 (base salary of HK$108,000 and bonus of HK$12,000) per month [3A/207].

108.  The latest pay slip for the period between 10 September to 23 September 2018 [3B/433] shows that the Husband is paid US$ 6,538.46 biweekly (i.e. an annual salary of US$ 170,000).  The Husband also pays US$784.62 biweekly into his 401k/retirement fund. This is not a mandatory contribution.

109.  As at 23 September 2018, the total amount of tax paid was US$53,192.84. In other words, the Husband’s net income as at 23 September 2018 was US$100,937.94.

110.  According to the Wife, the payment on 23 September 2018 should be the 19^th payment by CWUS to the Husband in 2018. According to those figures, the Husband’s net income (net of all deductions and tax) is HK$90,126.96 per month. If the Husband were to cease his contributions towards the 401K fund, he would have an additional HK$13,311.08 per month. This means that his monthly net income will be increased to HK$103,311.08.

111.  After consideration of their tax returns, the Wife is prepared to assume that the current level of financial aid from the school (i.e. 80%) would be maintained. In that event, the Children’s monthly needs amount to HK$46,195 [The Wife’s Closing Submission §58]. The Children’s education expenses will increase substantially if the amount of financial aid is further reduced. In the light of the disparity in their income, the Wife is asking the Husband to pay for the Children’s school expenses and contribute towards 69% of the Children’s living expenses, i.e. HK$33,642 per month (HK$5,703 as school fees with 80% financial aid + HK$27,939 as living expenses). If the parties were to share the Children’s total expenses at a ratio of 69:31, the Husband’s share would be HK$31,874 [The Wife’s closing submissions at §§58-59].

112.  The Court agrees with the Wife that the Husband’s alleged monthly expenditure are extraordinarily high. He complains about the Wife’s utility expenses of under HK$2,200 per month for a 3-person household and yet he says that he spends HK$2,802 on utilities each month on a 1-person household.

113.  The Husband takes Uber up to 4 to 5 times a day running up transportation costs of HK$4,788 per month when he has a car.

114.  The Husband set out 2 loans in his Form E dated 27 September 2016, namely USA Mortgage Loan (also known as the “Dreyfuss Loan”) and the “Fannie Mae Student Loan [1B/345]. The student loan should have been fully repaid by now. The Dreyfuss loan has been repaid. The Husband says that he has a “legal debt” in the sum of HK$250,000 in his purported updated Form E [3A/205]. According to an email from his previous solicitors dated 20 December 2017, the overdue amount as at 30 April 2017 was HK$209,157. It appears that the Husband has not repaid his former solicitors at all. The Husband also reported a “Mediation Debt” in the sum of HK$20,000 in his purported updated Form E. This has not been paid at all. It was therefore unclear what the monthly debt repayments in his purported updated Form E [3A/209] of HK$4,492 refer to.  

115.  The Husband says he spends an average of HK$3,876 per month on clothing and shoes. This includes an average of HK$1,000 on clothing for the Children each month. According to the Wife, the Husband spent very little time with the Children since his relocation and he has hardly purchased any clothing for them.

116.  According to the Husband, his monthly entertainment costs amount to HK$11,000. He has filed no Affirmation to explain this. He then tried to give evidence in his Closing Submissions which is unacceptable. In his submissions, he stated that the alleged amount included air fares for the Children’s visits. According to the Wife, the Husband has refused to pay for the Children’s long-haul flight from Hong Kong to San Francisco. He only paid for the domestic flight between Oregon and San Francisco, which is US$200. Further, the Husband alleged that he spent an average of close to HK$26,000 per month on the Children’s “CDR visits” [3A/210]. This is ridiculous. Even if the Husband had to pay for the air fares, it would not be HK$26,000 per month. The Wife has already included the estimated costs of the Children visiting the Husband in the United States in her proposed budget.  The bulk of the alleged entertainment expenditure and the alleged HK$26,000 for “CDR visits” per month could be used to pay for the Children’s maintenance.

117.  The Husband alleged that he spent an average of HK$1,765 per month on medical/dental and HK$1,412 per month on tax. The Wife’s calculation of the Husband’s net income has also taken tax into consideration. The cost of medical/dental insurance was also automatically deducted from his salary.

118.  In his list of expenses, he has included HK$14,412 per month as “Interim Maintenance Proposed Amount” [3A/209]. In Part 4.1 to 4.3, the Husband was asked to list out his current expenditure. In fact, he has only been paying HK$12,000 per month.

119.  In his list of current expenditure, the Husband stated that he spends HK$8,595 on “Retirement Funds & College Funds”[3A/209]. The parties did not have any retirement fund during the marriage. In his Form E, the Husband has only disclosed his Fidelity Fund. No evidence was produced in respect of the alleged “College Funds”. The Husband has failed to pay the Children’s school fees since the last two months of the 2016/2017 academic year. As a result, the Children had to be suspended from school. A college fund would be useless if the Children are unable to finish secondary school. This amount could be used for the maintenance of the Children (including the payment of school fees).

120.  It is more than evident that the Husband’s alleged expenditure is hugely exaggerated. The alleged “CDR visits” and “college funds” expenditure alone amount to HK$34,595 per month, which is more than enough to cover the HK$33,642 per month requested by the Wife. This is in fact much less than his alleged current spending on the Children which amounts to at least HK$47,126 (HK$1,000 per month on clothing + HK$14,412 on proposed interim maintenance + HK$31,714 on the Children’s expenses, exclusive of any part of the HK$11,000 entertainment costs spent on the Children). The Husband cannot expect to live a bachelor lifestyle whilst reducing the Children’s standard of living to a subsistence level.

121.  The Wife is asking the Husband to pay for the Children’s school fees (which at the time of the trial was HK$5,703 after 80% financial aid). The Wife undertakes to continue to use her best endeavours to apply for financial aid [Wife’s Closing Submissions §60]. In addition, she is asking the Husband to contribute towards 69% of the Children’s living expenses of HK$40,492 (i.e.HK$ 27,939 per month). In my Judgment, the Husband clearly has the ability to meet those needs.

Outstanding School Fees for 2016/2017

122.  The Wife says that the Husband has failed to comply with his undertaking to pay the Children’s school fees for the 2016/2017 academic year. The last 2 months of school fees in the sum of HK$47,364 is still outstanding. There is copious correspondence from the school in support of this allegation prior to the enforcement proceedings in San Francisco. The Wife is asking for a lump sum order as repayment of the school fees.

123.  In her 3^rd Affirmation dated 28 March 2018, the Wife says that the Husband failed to pay interim maintenance and school fees for the Children. She ought the assistance of the San Francisco Department of Child Support Services (DCSS). Enforcement proceedings intituled FDI-XX-XX842 were commenced in San Francisco. She stated that 2 sums of HK$13,844.69 were paid through the DCSS in December 2017 and January 2018 by garnishing the Husband’s wages. In February 2018, a sum of HK$44,241.60 was paid by the DCSS by garnishing the Husband’s wages and 401K fund. She provided a table of interim maintenance due and payments made. According to that table, between August 2016 and March 2018, the Husband should have paid HK$220,000 as interim maintenance. However, he only paid HK$184,919.97. The school fees for the last 2 months of the 2016/2017 school year are still outstanding[1A/237-239]. At the end of that Affirmation, she asked the Court for an order that the Husband repays the arrears of interim maintenance and school fees.  

124.  Firstly, the Husband informed the Court that the Child Social Services could reopen the case at any time. This is clearly untrue. The San Francisco Court only reserved jurisdiction over enforcement for 90 days. The Husband’s allegation that a “seamless transition” to the San Francisco Court was clearly an attempt to mislead this Court.

125.  However, the Wife’s version is also inaccurate. According to an order from the San Francisco Court filed on 7 May 2018 and produced by the Wife in her 4^th Affirmation [1A/374-384], the order made by that Court was as follows:-  

“The Court Further Orders:

Court makes a judicial determination of arrears. [The Husband’s] child support obligations are in overpayment in the amount of $5,474.00 USD as of 4/30/2018. This amount shall be applied towards a balance currently owed by [the Husband] for the children’s 2016/2017 school tuition. Both parents agree that this application of funds shall fulfill [the Husband’s] obligation for payment of his share of the children’s tuition and [the Wife] shall waive any claim for repayment for tuition for the 2016-2017 school year.

Both parents further agree that the expected tax refund in the amount of $12,566.00 USD shall be divided so that [the Husband] shall receive $5,000.00 USD and [the Wife] shall receive $7,566.00 USD. [the Husband] shall apply the $5,000.00 he receives to the “Dreyfuss debt” thus waiving any further claim to [the Wife] owing on the debt.

Court reserves jurisdiction for 90 days following formal service of the Order. After Hearing. Matter may be restored to calendar by request of the local child support agency with minimum twenty-one day notice to the parties. The restoral provision is only allowed within the ninety-day reservation”[1A/378].

126.  According to that Order, the Court in San Francisco made a judicial determination that there was no interim maintenance in arrears. To the contrary, there was overpayment by the Husband in the sum of US$ 5,474 (which is equivalent to HK$42,587.72 at an exchange rate of HK$7.78) as of 30 April 2018 (i.e. 1 month after the Wife filed her 3^rd Affirmation). Under that Order, the overpayment of US$5,474 was to be applied towards the balance of the school fees for the 2016/2017 school year.

127.  It appears that the Court in San Francisco found as a fact that there was an overpayment by the Husband. The issues of arrears of interim maintenance and school fees have been determined between the parties by a Court of competent jurisdiction and the parties are bound by that finding. This issue is Res Judicata and the Wife is not at liberty to reopen it in this Court.

128.  Paragraph 2 of the Order from the San Francisco Court stated that there was an agreement between the parties that an expected tax refund in the sum of US$ 12,566.00 was to be divided so that the Husband would receive US$ 5,000 and the Wife would receive US$ 7,566. The Husband had to apply the US$5,000 to the “Dreyfuss debt”. The Wife explained that the tax refund was only US$ 2,820.66 and not US$12,566. She argued that the Husband was in breach of the settlement agreement as he had already repaid the “Dreyfuss debt” in full at the time of the settlement and he retained the entire tax refund. She submitted that because of the breach, she was entitled to renege on the agreement. She stated that after the application of the US$ 5,474 (i.e. HK$42,587.72), the Husband still owes school fees in the sum of HK$34,776.28 for the 2016/2017 school year.

129.  This Court does not understand why there was reference to the tax refund and “Dreyfuss loan” in the San Francisco Court Order. According to both parties, the proceedings in San Francisco were enforcement proceedings for arrears of interim maintenance and school fees. The reference to a division of assets between the parties by the San Francisco Court is particularly puzzling in view of the fact that there is no ancillary relief claim by the Wife in existence.

130.  No expert evidence has been called on American law as to the effect of this agreement in the absence of any ancillary relief claim by the Wife. The tax refund was a mere fraction of what was expected by the parties and no explanation has been given to this Court. The amount refunded was clearly insufficient to enable the parties to proceed with the agreement in paragraph 2 of the San Francisco Order. I do not know when the tax refund was effected. The San Francisco Court reserved jurisdiction over the enforcement of its Order for 90 days after formal service. No explanation has been provided as to why no application was made to that Court in the light of the unexpectedly disparity between the amount expected and the actual amount received.       

131.  The Wife’s case on the amount of the outstanding school fees is wholly self-contradictory. In her 3^rd Affirmation, the Wife stated that she had paid a total of HK$77,364 as school fees for the 2016/2017 school year with the assistance of a personal loan from A. On 6 October 2017, the Husband paid her HK$30,000 and this was applied to repay A. She went on to state that after the payment of HK$30,000, the outstanding school fees were HK$47,364 [1A/239-241]. If that were true, after the overpayment of HK$42,587.72 was paid, the balance of outstanding school fees would be HK$4,776.28.

132.  However, in her 4^th Affirmation dated 2 October 2018, the Wife stated that the amount of outstanding school fees for the 2016/2017 school year was HK$34,776.28 after the application of the overpayment of HK$42,587.72 [1A/303]. This was wholly inconsistent with her 3^rd Affirmation.

133.  She further contradicted herself in her Closing Submissions, where she is asking for repayment of HK$47,364 [Wife’s Closing Submission §63].

134.  The Wife has given no explanation as to the inconsistencies in her evidence in respect of the school fees. Moreover, there is no dispute that the “Dreyfuss debt” was a joint debt and that the Husband has repaid it in full on his own, thereby releasing the Wife from liability. No credit has been given by the Wife for that repayment.

135.  In the light of all the matters mentioned above, this Court is not satisfied that the amounts of school fees stated by the Wife are outstanding.

Backdating of the Order

136.  The Wife is asking the Court to backdate the order for periodical payments to September 2017 [See draft order attached to the Wife’s Closing Submissions]. The interim payment made by the Husband since September 2017 was clearly inadequate to meet the Children’s needs. The Wife has been forced to pay for the Children’s expenses by taking personal loans. The Husband has a much higher disposable income than the Wife.

137.  At the interim maintenance stage, the Court does not have the benefit of hearing evidence and is unable to make findings of fact. Such applications are dealt with on a broad brush basis. Any overpayment or underpayment could be taken into account in the final ancillary relief trial. In the present case, the Court sees no reason why the underpayment of maintenance for the Children should not be taken into consideration in the Order for periodical payment. The Order will be backdated to September 2017, with credit to be given to the Husband for payments already made by the Husband.

138.  By reason of all the above mentioned matters and upon the Wife’s undertaking to continue to use her best endeavours to apply for bursary/financial aid from the Children’s school.

IT IS HEREBY ORDERED THAT:

(1) The Petitioner do pay the tuition expenses (inclusive of school fees and building levy) of the Children;

(2) Subject to the Petitioner paying the Children’s tuition expenses pursuant to paragraph 1 above, the Petitioner do pay to the Respondent periodical payments in the sum of HK$13,969.50 per month for the benefit of each child (i.e. a total of HK$27,939 per month for both Children), such amount to be adjusted on the 1^st day of January each year with effect from January 2020 by such amount as is equivalent to the increase/decrease in the Consumer Price Index in Hong Kong in the previous year;

(3) The periodical payments for the benefit of the Children shall be backdated to September 2017, provided that credit shall be given for payments already made by the Husband;

(4) Liberty to apply;

(5) Costs reserved.

AND IT IS DIRECTED THAT

(1) The Respondent do file and serve her submissions on costs within 21 days from the date of this Order;

(2) The Petitioner do file and serve his submissions on costs within 21 days thereafter;

(3) There be a paper disposal on costs.

Dated this 24 day of September 2020.