LRY v. LCM nee MCE

FCMC 14297 / 2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 14297 OF 2012

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J U D G M E N T
(Variation of maintenance)

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1.  I refer to the Petitioner father as “P” and the Respondent mother as “R” respectively.

Background

2.  This is the trial of P’s Summons dated 17 October 2014 for variation of maintenance payment for the two children of the family, viz., a boy (“T”), now aged 19 and a girl (“A”), now aged 15.

3.  P, now aged 49, was born and brought up in France.  He came to work in Hong Kong in January 1995 and is a permanent resident of Hong Kong.  R is a Filipino, now aged 48, also a permanent resident of Hong Kong. She worked as a flight attendant from 1990 to 2001.  The parties met in Hong Kong in March 1995.  They started cohabitation relationship in 1996.  R was pregnant by P and the parties were married in May 1997 in Hong Kong.  She gave birth to T in September 1997 in Hong Kong.  R resigned from her job as flight attendant and became a homemaker in 2001.  A was born in September 2001.  P worked as a director of a trading company from 2006 to early 2014.  As stated in his Form E dated 12 November 2012, his income was about HKD200,000 per month then.

4.  P filed the Petition for divorce on the ground of unreasonable behaviour on 24 September 2012, which said Petition was amended to consent one year on 21 June 2013.

5.  On 14 May 2013, by consent it was ordered that:

(a)   Custody, care and control of T and A be granted to R;

(b)   P was to pay monthly a sum of HKD83,000, being HKD41,500 for the maintenance for each of the children, commencing from 1 June 2013;

(c)   In full and final settlement the parties’ respective claims for ancillary relief, P was to pay R a lump sum of HKD2,881,000 of which HKD1,500,000 was put into an investment product that would provide for R when she turned aged 55.

6.  On 19 July 2013, by consent it was further ordered that P would have day access to the children for not less than one hour per week and staying over weekends and holidays.

7.  P’s previous employment was terminated in January 2014.

8.  In January 2014, P applied for leave to issue committal proceedings against R for allegedly that she denied his access to the children.

9.  The Decree Absolute was granted on 4 February 2014.

10.  Through mediation, the parties settled the issue of access in terms of the Mediation Agreement signed by the parties on 7 August 2014.  Upon the parties’ mutual undertaking that the two Orders respectively dated 14 May 2013 and 19 July 2013 should have full force and effect, on 26 September 2014, by consent it was ordered that P was to have staying access to the children at least once a month.

11.  On 17 October 2014, P took out the Summons for variation down of the maintenance payment to the children.

12.  On 18 March 2015, R applied for leave to issue Judgment Summons against P for enforcement of his maintenance payment to the children.

13.  On 20 April 2015, P took out the Summons for variation of the custody, care and control of the children.

14.  On 29 April 2015, it was directed that the hearing of P’s Summons dated 20 April 2015 was fixed on 9 September 2015, with 10 September 2015 also reserved, and the hearing of his Summons dated 17 October 2014 was adjourned to a date to be fixed after the disposal of the children application.

15.  By the Judgment dated 25 September 2015, the Summons dated 20 April 2015 for variation of the custody, care and control of the children of the family was dismissed.

16.  On 11 November 2015, R applied for leave to remove A with her to Manila and an order that, on P’s undertaking that he would take care of T’s maintenance, the maintenance payment to her for A to be continued to be HKD48,000 per month when A lives in Manila.  On 23 February 2016, by consent it was ordered that R could remove A to Manila after she finished the 2015/2016 school year and that a Children Dispute Resolution on access was fixed on 5 July 2016.  However, P did not agree to continue to pay HKD48,000 per month for the maintenance of A living in Manila.

17.  On 5 July 2016, the parties accepted the existing arrangement that P should have staying access to A at least once a month.  An order for access was no longer required in T’s case, as he turned to 18 years old in September 2015.  Upon P’s undertaking that he would take care of the maintenance for T, on 5 July 2016, as a stopgap measure, it was ordered that the Order dated 14 May 2013 be varied to that P was to pay R HKD40,000 per month for A, effective from 1 September 2016, and that the hearing of the question of maintenance for the two children of the family be adjourned to 8 November 2016.

18.  R together with A moved to live in Manila in August 2016.  T went to study in Rennes, France in September 2016.

P’s case

19.  For the present application, P contended that:

(1)   The maintenance amount of HKD83,000 per month was based on his income of about HKD200,000 per month.  Since January 2014, he had been unemployed and without income and had been paying the maintenance for the children out of his retirement savings.  As a result, his savings was withered and he could no longer finance his retirement nor afford to maintain the two children of the family;

(2)   R not only inflated her claim for A’s monthly expenses in HK and Manila;

(3)   but misused his child maintenance payment to maintain her own living costs;

(4)   He furthermore did not believe that R had no savings. 

(5)   Even assuming she too was without income and without savings, the parties were on equal footing.  In the circumstance, the parties should share the financial burden of the children maintenance.  Each party should take care of the maintenance of the child who would stay with him or her.  He would take care of T’s living expenses of HKD12,800 per month in France, but his maintenance payment for A should be set at nil;

(6)   Was R unable to support A’s living in Manila, lastly, A could go to live with his family in France in which case her housing and education would be free. 

R’s case

20.  In response, R argued:

(1)   A’s monthly expenses living in Manila were HKD37,247.63;

(2)   Despite that P was currently unemployed and without income, he still had over HKD3.56 million in bank and MPF valued at about HKD0.56 million when she was without income and without savings;

(3)   Accordingly, P should continue to be responsible for the maintenance of the two children.

21.  Her request was that:

(1)   The existing arrangement that P was to pay R HKD40,000 per month for A was to continue;

(2)   P be ordered to immediately pay her a lump sum of HKD1,320,000, i.e. the next 33 months’ maintenance payment for A;

(3)   P was to pay a lump sum of HKD106,000 to make up the shortage of his July 2016 and August 2016 monthly maintenance payments.

My view

22.  s 7(2) of the Matrimonial Proceedings and Property Ordinance Cap 192 (“MPPO”) provides that:

“...it shall be the duty of the Court in deciding whether to exercise its powers under s 5, 6 or 6A in relation to a child of the family and , if so, in what manner, to have regard to all 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 expected him to be educated;

and so to exercise those powers to place the child, so far as it is practicable, 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.”

23.  P’s application to vary is made pursuant to s 11(7) of the MPPO, which provides that:

“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 ...”

24.  The Court considers P’s application to vary on the basis of the means of the parties as they stand at the time when the case is before it and that the principles governing the assessment of periodical payments will in broad measure apply to the applications to vary: the overriding objective is fairness.  Discrimination between the sexes must be avoided. (See Ch 14.9 Rayden andJackson on Relationship Breakdown, Finances and Children, Issue 1 September 2016)

25.  It is accepted that the maintenance amount of HKD83,000 per month was based on P’s income of around HKD200,000 per month, and he was unemployed and without income and was paying the maintenance for the children out of his savings.  Taking into consideration the change in the circumstance, I may look at the case de novo.  In other words, the Court is not necessarily fettered by the existence of the previous Order dated 14 May 2013.  I may look at the situation afresh and make an order base on the parties’ existing circumstance. 

26.  Though the statutory guideline is that the Court shall in deciding whether to exercise its powers under s 5 of the MPPO in relation to the children of the family to have regard to all circumstance of the case, I consider that the two most outstanding matters in the present case are the reasonable financial needs of the children, having regard to the standard of living of the parties during marriage, and the ability of the parties to pay.  I shall first deal with the question of the children’s reasonable financial needs.

T’s reasonable financial needs

27.  There is no serious dispute that T’s monthly expenses living in France at HKD12,800 are reasonable.  He might finish his first degree in 6 semesters, i.e. 30 months from now.  That is to say, he will need HKD12,800/month X 30 months = HKD384,000 in the future.

A’s reasonable financial needs

28.  P contended that R bloated the calculation of A’s monthly expenses in Manila.  According to her, A’s monthly expenses are as follows:-

Part 1 Item Amount HKD Rent 12,916.66 School bus 1,777.77 School canteen 833.33 Allowance 666.66 School fees 9,124.83 Telecom 800.00 Broadband 516.66 Electricity 2,676.66 Water 833.33 Part-time helper 433.33 Sub-total: 30,579.33 Part 2 Item Amount HKD Food 3,333.33 Travel to HK 769.00 Health insurance premium 500.00 Contact lenses/ eyeglasses 590.00 T’s allowance 1,476.00 Sub-total: 6,668.33 Total Monthly Expenses:    HKD37,247.63

Rent

29.  About R’s claim for 100% of the rent that she is paying, P contended that since R needed her own apartment with or without A and it was R’s choice to rent a apartment at HKD12,916.66 per month, which was excessive in view of the low living costs in Manila, only 25% of the rent should be attributed to A.  Yet, he has not produced any evidence to show the market rent in Manila.  Before the broken down of the parties’ marriage, P was a high income earner, the children of the family went to expensive private international school and the family lived in a spacious apartment in an upmarket residential district in Hong Kong.  They lived an upper middle class standard of living during marriage.  Having regard to the parties’ past living standard, it is not readily apparent to me that the rent of HKD12,916.66 per month that R is now paying is excessive.  In view of that R and A live together in Manila, however, I regard it is fair to attribute only 50% of the monthly rent, i.e. HKD6,458.33, to A’s maintenance.

School bus

30.  In view of the receipt for the expenses of school bus produced by R, I accept this item of HKD1,777.77 per month.

School Canteen

31.  The expenses for A’s lunch and snacks at school are calculated at HKD833.33 per month.  Taking that there will be about 20 school days a month, it is about HKD42 per day.  Given that a set lunch for A at school would cost about HKD30, it seems that the claim for HKD42 per day for lunch and snacks is not unreasonable. In view of that A will not go to school during school holidays, however, I shall reduce this amount by 15%.  I accept this item at HKD708.33.   

Allowance to A

32.  It is reasonable that A, aged 15, has pocket money.  I also accept that the amount of HKD666.66 per month is reasonable.

School fees

33.  Given that all along A has been attending private international school, it is reasonable for her to continue her secondary education with a private international school in Manila.  Despite P’s queries, it is not readily apparent to me that the receipts for the school fees produced by R are incredible.  I accept the school fees of HKD9,124.83 per month.

Telecoms, broadband, electricity and water

34.  The calculation for these items is HKD4,826.65.  As P contended, the receipts and utilities bills produced by R did not support such a high amount.  Again, P has not produced any evidence to show what will be the reasonable expenses.  Doing the best I can in the circumstance, I shall attribute 25% of the said sum, i.e. HKD1,206.66 to A’s expenses on these items.

Part time helper

35.  P contended that A, who is mature enough to take care of herself, does not need part time helper.  Taking into consideration the past standard of living of the parties, I do not regard that the expenses of HKD433.33 per month for a part time helper is excessive.  I accept this item of HKD433.33 per month.

Food

36.  I do not accept P’s contention that food for A at HKD3,333.33 per month is excessive, notwithstanding that a total sum of HKD1,499.99 per month is already provided for her lunch, snacks and pocket money.  Once more, P has not produced any evidence to show what will be the reasonable expenses.  Taking a broad brush approach, I accept this Food item.

Travel to HK

37.  The parties have agreed that A would fly to HK to meet P once a month.  It is accepted that P should pay for A’s flight ticket.  P nevertheless complained that, despite the parties’ agreement, he had not seen A since the end of August 2016 and he therefore suspected that it was unlikely that A would fly to HK on any regular basis in the future.  In view of P’s complaint, I regard it is fair to remove this item from the calculation of A’s monthly expenses, subject to the condition that P shall reimbursement R the reasonable costs of A’s flight ticket when A flies to HK to meet him.

Health insurance, contact lenses, eyeglasses

38.  There is no serious dispute on A’s health insurance premium, contact lenses/ eyeglasses expenses at HKD500 per month and HKD590 per month respectively.

T’s Allowance paid by R

39.  Since any allowance paid by R to T will be R’s expenses instead of A’s expenses, I accept that this item should be removed from A’s monthly expenses. 

40.  By reason of the matters aforesaid, A’s reasonable monthly expenses in Manila are HKD24,799.24. 

41.  She will finish secondary education in 33 months.  The parties have agreed that she will study at an university in France after her secondary education.  Education is free for her in French.  Assuming that she will need about the same amount that T does for living in French and given that she might finish the first degree in 30 months, her needs will be HKD24,799.24/month X 33 months + HKD12,800/month X 30 months = HKD818,374.92 + HKD384,000 = HKD1,202,374.92 in the future.

R’s ability to pay

42.  Despite P’s queries, I accept that that R does not have the means to pay for A’s monthly expenses.  When the parties settled their respective claim for ancillary relief, R received HKD2.881 million under the Consent Order dated 13 May 2013.  She furthermore received about HKD3 million in dividends from a company jointly owned by the parties.  Pursuant to the parties’ agreement, out of the said HKD2.881 million, about HKD1.1 million has been put in an investment product that will provide R periodical payments of about HKD8,000 per month as from the time when she reaches aged 55, which said periodical payment will be increased to about HKD9,000 per month when she is aged 65, until she is aged 99.  It is accepted that such investment is not currently available to pay for A’s maintenance.  P however did not believe that R spent the remaining balance of the said HKD2.881 million as well as the said HKD3 million in couple of years.

43.  As discussed below, I am prepared to accept that R lost about HKD1.9 million in her investment in the convenient store franchise business in Manila.  She bought the franchise for about HKD1.7 million in about September 2012.  It is accepted that the convenient store was closed and the franchise was terminated by the operator in 2014.  She produced the copy of two demand letters and the termination letter sent from the operator of the franchise to her respectively dated 3 July 2013, 28 February 2014 and 14 April 2014.  The said letters showed that R had owed to the operator large sums of money under certain unpaid accounts since May 2013.  The said letters together with a “Table A” prepared by her were produced and exhibited to her Response (to P’s questions) filed on 8 January 2015.  In the said Table A, she pleaded her case that she purchased the franchise for HKD1.7 million and she was liable to pay large sums of money to the operator.  At trial, P said he was doubtful as to exactly how much she had lost in the business because R had not produced the Financial Statement mentioned in the said letter 14 April 2014.  In response, R said had P requested for the Financial Statement, she would have produced it to him.  P has not requested the Financial Statement before the trial.  I have not lost sight that as R carries the burden to prove her case that she has lost about HKD1.9 million for the convenient store business, it is her duty to produce the relevant documentary proof including the Financial Statement.  In view of the said letters sent by the operator to R, however, with or without the Financial Statement, it is apparent that R’s convenient store business has been in very bad shape financially for a long time before the termination.  After having carefully considered the contents of the letters from the operator and the undisputed fact that the franchise was terminated by the operator in 2014, I accept that she lost totally her initial investment of over HKD1.7 million, in addition to further operation loses such as the liabilities mentioned in the said letters from the operator.  All in all, I accept that she lost HKD1.9 million in the convenient store business.

44.  After having carefully considered the Table A prepared by R and her testimony in this respect, I accept that she spent about HKD1.1 million on private investigation, HKD783,000 on legal costs and HKD139,000 on dental surgery. 

45.  The difference between the said HKD2.881 million plus HKD3 million and the said sums of about HKD1.1 million, HKD1.9 million, a further HKD1.1 million, HKD783,000 and HKD139,000 is HKD859,000.   According to her Form E filed on 11 December 2014, R’s monthly expenses including general expenses, personal expenses and the two children’s expenses were HKD109,663.56 per month.  P used to pay her children’s maintenance at the rate of HKD83,000 per month.  It follows that she needed to pay out of her own pocket about HKD26,663.56 per month for living with the children in HK.  In my view, it is unsurprising that she has spent the said HKD859,000 on her living with the children in HK since the Consent Order dated 14 May 2013.

46.  R owns a barren island in Philippines that was purchased for about HKD500,000.  R said she had put up the island for sale, for about HKD250,000, without success since 2012.  It is not in serious dispute that the island does not yield any income that can be used to pay for A’s maintenance.

47.  R’s deceased mother was the registered owner of a house in Philippines that is valued by R at HKD30,000.  As her mother was not survived by a spouse, she and her sister, being the only children, are entitled to equal share of their deceased mother’s interests in the house.  However, the house where her sister (and her family) are living does not yield any income that can be used to pay for A’s maintenance. 

48.  Despite P’s queries, in view of the Deed of Absolute Sale dated 13 November 2013 produced and exhibited to her Response (to P’s questions) filed on 8 January 2015, I accept that R sold the house situated in the suburb of Manila for about HKD90,000 on 13 November 2013.  R said she had used the sale proceeds for legal fees.

49.  As to the question of R’s earning capacity, she has sent out job applications without success in search for a position in Manila.  She is aged 48.  Despite that her age works against her employability and she is also disadvantaged by the fact that she has been out of the job market for some years, she has a degree in business and law, a LL.M. degree, speaks fluent English and the local language, her mother tongue, and lives in her mother country.  All the above suggest that there is good chance for her of eventually getting a job that covers her living expenses and housing need in Manila.   Notwithstanding what opening to her in the near future perhaps are the more junior positions, e.g. front desk receptionist, junior clerks, etc., that pay about HKD4,500 to HKD5,000 per month in the local job market, as times go by, she might earn more.  In my view, however, it is unlikely that she can pay for A’s monthly expenses with her earnings.

50.  P proposed that each party would take care of the maintenance of the child who would stay with him or her.  He suggested that R should pay for the maintenance of A when he would take care of the maintenance of T.  For the reason that R does not have the ability to pay for A’s monthly expenses,I do not regard that P’s proposal is realistic.

51.  I accept that P is on firmer ground when he contended that it was financially irresponsible for R to have wasted HKD1.1 million on private investigation, but I do not regard that this could mean that the Court should order R to pay for A’s maintenance when in fact that she does not have the ability to do so.

P’s ability to pay

52.  I now turn to the question of P’s ability.  Under the settlement agreement reached between the parties in 2013, they equally shared the family assets.  The result was that each party was provided with about HKD6 million.  P said that he could not afford to take care of the maintenance of A for he had been using up his retirement savings to maintain his living and to pay for the maintenance of the children since he was unemployed in January 2014.  As per his Form E filed on 19 October 2016, he owned a house in France, valued at HKD1 million net of outstanding mortgages, interest in bank valued at about HKD3.56 million, and MPF valued at around HKD0.56 million.  He has been committed to make two investments in the near future. The first investment of HKD520,000 is a joint venture business that he has refused to disclose the details to R.  The 2^nd investment of HKD850,000 is a joint venture of property investment aiming for immediate rental income and long term capital gain.  He expected that the 2^nd investment would produce an income of HKD6,550 per month to him.  As shown in the above, even accepting that he needs to set aside the said sums of HKD520,000 and HKD850,000 for investments, he will still has more than HKD2 million liquid assets.  Moreover, P is a well-connected businessman, having tremendous experience in the local import-export trade.  It is clearly too pessimistic to assume that he will not earn high income in the future.  For example, his first investment may fail, but it also can be very successful and profitable.  And probably his 2^nd investment will produce steady income and capital gain to him.  Despite P’s contention to the contrary, taking the matters in the round, I take the firm view that he is able to pay for the monthly maintenance of the two children.  

53.  I do not accept that if R is unable to support A’s living in Manila, A should go to live with his family in France.  It is worthy of noting that it was not entirely R’s choice to remove A to Manila.  P eventually consented to R’s leave application. At that time, having carefully considered all of the relevant factors and the social worker’s views and having given due consideration to A’s clear wish to go to Manila and to stay with her mother, the parties accepted that it is in the best interests of A to continue living with R and study in Manila until she finishes secondary education.  There is nothing shown to me that there is material change in the best interest consideration that the parties have had.  On the contrary, given that A has been settled down in Manila, it is obviously not in the best interest of the child to hastily uproot her from Manila as suggested by P.

54.  The Court has a very wide power, including a power to backdate the variation ordered: the overall objective is to achieve a fair outcome.  On 5 July 2016, P was ordered to pay HKD40,000 per month for A’s maintenance from 1 September 2016.  A went to Manila in August 2016.  Although it is my finding that the reasonable monthly expenses of A living in Manila are HKD24,799.24 per month and, therefore, it can be argued that P has paid HKD15,200.76 more per month during the period from September 2016 to December 2016, i.e. totally HKD60,803.04, I do not intend to backdate the variation ordered to September 2016.  It is because I regard that the said sum of HKD60,803.04 could be viewed as payment to cover the extra costs incurred by A’s removal from HK to Manila.    

55.  For the period from the date of the present application, i.e. 17 October 2014 to 31 August 2016, during which the two children lived with R in HK, P was required to pay HKD83,000 per month for the maintenance of the children.  As seen in the above, according to her Form E filed on 11 December 2014, R’s monthly expenses including general expenses, personal expenses and the two children’s expenses were HKD109,663.56 per month.  However, P complained that R misused his maintenance payment for the children to maintain her living costs in HK.  In my Judgment dated 25 September 2015, at page 15, I said,

“ P said again and again that R was using the children maintenance paid by him to maintain her own living costs. The thrust of his complaint is that R rented a three bedroom apartment in Braemar Hill for HKD40,000 per month. He felt strongly that it will be utterly unfair if he is required to continue using up retirement savings to finance her rental payment for a luxurious apartment, while he is living in a modest flat in North Point. As stated by Mr. Cheung in his 1^st Updated Reported (see paragraph 24), as the children are adolescents who naturally want more privacy, they long to have their own rooms. To give the children their space and privacy, R’s housing needs to have at least three bedrooms. R explained that she chose an apartment in Braemar Hill for it is near to the children’s school. There is no evidence that P can rent a comparable three bedroom apartment for less than HKD40,000 per month. Unless some sacrifices will have to be made in P’ household, if the children move to live with him, correspondingly limiting the resources available to the children, it is unlikely that the parties can save money simply by changing the daily care and control of the children from R to P. The point is whether there should be a downward adjustment of the quality of living that the children now enjoy. As what I said in the above, such point should be dealt with in the hearing of the summons dated 17 October 2014.”

Having regard to the upper middle class standard of living of the parties during marriage and P’ ability to pay for the children’s maintenance, I do not accept that it was excessive for R to have paid rent of HKD40,000 per month so that the children could have lived in an apartment near to their school and could have the privacy of single bedroom.  In broad measure, I do not regard that the general expense and children expenses as shown by the Form E filed on 11 December 2014 are excessive.  In the premises, I see no reason to backdate the variation ordered to any time earlier than 1 September 2016.

Disposal

56.  In conclusion, upon P’s undertaking to take care of T’s maintenance, it is ordered that P shall pay R the sum of HKD24,799.24 per month, the 1^st payment to be paid on 1 January 2017, until 1 June 2019, and thereafter the sum of HKD12,800 per month, the 1^st payment to be paid on 1 July 2019, for the maintenance of A, until A reaches aged 18 or finishes full time education, whichever is the later.  The said periodical payments are to be paid to R’s designated bank account.

57.  P shall reimbursement R the reasonable costs for A’s flight ticket when A flies to HK to meet him.

58.  In view of P’s financial situation, it is unrealistic to require him to pay upfront for the maintenance of A for the next 33 months.

59.  P denied that he was in default of the July 2016 and August 2016 monthly maintenance payments.  In view of that this issue was not fully addressed by the parties at the trial of the present application, I do not intend to deal with the parties’ dispute in this regard.  If it suits her needs, R might consider taking out separate application to the Court for an appropriate order.  It will be entirely her choice as to whether to pursue the matter any further.

60.  It appears that neither party can be regarded as wholly successful in the present application. It is ordered nisi that there shall be no order as to costs, including all reserved costs.  The order nisi becomes absolute 14 days after the order is made unless a party has applied to the court for varying the order.