Ses also known as Sbes v. Hkl
Read the full judgment text of FCMC 7243/2008 on BabelCite. This Family Court judgment was delivered on 28 June 2017 before Her Honour Judge Sharon D. Melloy.
Variation of maintenance – Matrimonial Proceedings and Property Ordinance Cap 192 s.11 – change of circumstances – redundancy – children’s expenses – university fees – suspension of order – assessment of reasonable expenses – Petitioner husband applied to reduce maintenance for wife and two children following redundancy – Court found husband's redundancy constituted significant change of circumstances – Wife's maintenance suspended until husband finds employment – Children's maintenance reduced to reflect parties' similar asset bases and wife's exaggerated expenses – N's maintenance reduced to HK$10,000 per month plus university fees – E's maintenance reduced to HK$33,000 per month – No order as to costs.
Legal issues: Power to vary maintenance order · Change of circumstances · Assessment of children's maintenance
Outcome: Maintenance order varied; wife's maintenance suspended; children's maintenance reduced; no order as to costs.
Cites 2 cases
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FCMC 7243 / 2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 7243 OF 2008 ----------------------------
---------------------------- Coram: Her Honour Judge Sharon D. Melloy in Chambers (Not open to public) Dates of Hearing: 23 and 24 March 2017 Date of Petitioner’s written closing submission: 11 April 2017 Date of Respondent’s written closing submission: 4 May 2017 Date of Judgment: 28 June 2017 ----------------------- J U D G M E N T ----------------------- Introduction 1.This is an application by a Petitioner husband to reduce the maintenance for the wife and the two children of the family to an amount that the court thinks fit. The original court order 2.The original ancillary relief trial was heard over an 18-day period in late 2010/early 201l. It was a hugely contested matter that centred in part on the weight to be attached to a Deed of Agreement entered into prior to separation. At the end of the day the court made an order inter alia as follows:
3.In addition, the husband undertook to pay for the following items for or on behalf of the two children of the family until, they reached the age of 18 years or ceased full time education, whichever is the earlier:
4.It is of note that at the time of the trial the court found that the parties had an asset base of approximately HK$53.6 million. The wife argued quite forcibly that the B property should be transferred to her either outright or subject to a charge. At the end of the day this was not accepted. She also argued for significantly more maintenance than was ultimately ordered. The husband for his part asked that the Deed’s provision on maintenance be upheld. Paragraph 13 of the Deed stated as follows:
5.At the end of the day I agreed inter alia that this provision was fundamentally unfair and could not be enforced. I also agreed that in so far as maintenance for the children was concerned that the approach taken in the Deed was “contrary to public policy”. 6.In broad terms then, once the arguments were stripped away, the final order was a fairly standard one with both husband and wife receiving approximately 50% of the assets and the husband being obliged to provide ongoing financial support for both the wife and the two children of the family. The actual outcome 7.I am told that infact the B property was not sold and that the parties continue to hold that property jointly and to receive rental from it. They each receive 50% of the net rental income. The husband continued to pay maintenance to the wife for both herself and the two children of the family notwithstanding the fact that his own income has reduced significantly over the years. Ultimately he was made redundant on the 2 June 2016. He has not worked since. At the time of the trial I made the following findings with respect to the husband’s then income:
8.It is the husband’s case that there has indeed been a significant change of circumstance and that the maintenance payments must now be reduced. It is also his case that he has tried to find alternative employment but without success. 9.The wife does not work and has not done so since the parties married. She is and always has been a full time housewife. I said this of her earning capacity in the ancillary relief judgment:
10.The wife has not remarried and there was no suggestion in this hearing that she is romantically involved with anyone. 11.I am also told that there have been ongoing difficulties with some other aspects of the judgment. For example, there have been issues with respect to the reimbursable extra tuition and extra-curricular costs. It is the husband’s case that the wife has not provided him with relevant receipts and consequently he has generally not paid the HK$4,000 per month per child allowed for. It is the wife’s case that she has paid for this expense out of her own pocket. The husband does not believe that the children have many such activities in any event and it is of note that the wife was only able to produce old receipts going back in the main to 2012 and 2013 when she filed her supplemental affirmation dated the 23 November 2016. I accept that this supports the husband’s position on this point. Background 12.I originally set out the background to the marriage at paragraph 4 – 7 of the judgment dated the 13 April 2011. Reference can be made to that as necessary. Since then the husband has remarried and he now has a baby daughter who has just turned one year of age. The husband’s wife does not currently work and although she is said to have an earning capacity of sorts that is also quite limited. The father still has a very strained relationship with the elder son N, who is now 18 years of age and who has just graduated from High School in Hong Kong. He is said to be a good student and has received university offers from both the United Kingdom and the United States. I am told (although this was not known at the time of the hearing) that his preference is to go to the University of X (X) in Los Angeles, USA. The younger daughter of the marriage E still attends the same international school in Hong Kong. She is 12 years old and she sees her father on a regular basis, although contact has been difficult at times. E has scoliosis and this is a matter of some concern to both of the parents. The mother continues to reside in an affluent area on the south side of Hong Kong Island with both children. This will of course change when N leaves for college/university in September/October. It is the wife’s case that she will wish to continue to provide a home base for N in Hong Kong during his undergraduate years and beyond. She says that in Korea it is customary for children to live with their parents until they marry. Consequently, she anticipates supporting the children in part until that time. 13.On the 19 October 2016 payment of the wife’s maintenance in the sum of HK$55,000 per month was suspended on a temporary basis pending final determination of the husband’s summons. The husband has continued to pay for all other expenses as ordered by the court from his own savings. The law 14.The husband’s application is made pursuant to section 11 of the Matrimonial Proceedings and Property Ordinance Cap 192, which provides inter alia that:
15.In the context of this case reference should be made in particular to paragraph 11 (2). Thus it should be noted that the court has no power to vary an order for the sale of a property made under section 6 (e). The wife suggested earlier on in the proceedings that the husband should transfer his half share of the B property to her on a clean break basis, in return for the discharge of the order for her maintenance. Although this was not later pursued, for the avoidance of doubt it should be noted that it is not possible for the court to make an order in these terms in any event. Thus the order for sale in relation to the B property remains and cannot be altered. 16.Generally speaking, it is accepted that in considering a change of circumstances, I may look at a case “de novo”. I am not bound by the previous order for maintenance and I can look at the situation again bearing in mind the parties now existing financial circumstances. There is also generally a reason for an application to vary or what some might call a “trigger”. In this instance it is the husband’s case that the “trigger” is his redundancy and that all other matters relating to his change of circumstances are simply other peripheral issues that should be taken in to account when looking at the matter over all. I accept that that is the correct approach. 17.The court has a very wide power, including a power to suspend or terminate payments and to backdate any variation ordered. The overall objective is to achieve a fair outcome (see M v M, FCMC 4070 of 1990, dated 12 May 2006, unreported). 18.Both parties have also referred me to a number of cases on variation which have been considered including the first instance decision L v C, FCMC 7240 of 2006 (unreported) and the Court of Appeal decision in AEM v VFM (Variation of Maintenance) 2008 HKFLR 106. Variation of maintenance The husband’s case 19.In short then it is the husband’s case that it is becoming increasingly clear that he is unlikely to find another job in the financial industry and consequently it is incumbent on both sides to reduce their expenses accordingly. He points out that both sides have roughly the same amount of assets i.e. approximately HK$28.4 – 28.5 million. This is more than each was awarded at trial. In addition, both sides have continued to hold their assets in similar vehicles where the rates of return are similar. Both parties receive the same income from the B property and in addition the husband also receives an additional small income from another rental property. But in broad terms their current financial position is very similar. Thus the husband says that it is inconceivable that he should be expected to fully maintain the wife and children from his assets, whereas there is no similar expectation that the wife should do likewise. Unless there is some change he expects to be without funds in 7 – 8 years’ time. The husband’s proposal 20.With this in mind the husband proposes that: The wife a) the wife’s maintenance payment of HK$55,000 per month be fully discharged; N b) he shall continue to pay the equivalent of HK$240,000 (being the cost of schooling in Hong Kong) as tuition fees for N once he goes to university or college. The husband points out that this would most probably cover N’s fees in full if he were to go to university in the United Kingdom. If he chooses to go to university in the US then the wife should pay the short fall; c) In addition the husband proposes paying for the following expenses until N finishes his undergraduate university education:
d) prior to university the maintenance for N shall be reduced to HK$20,000 per month; e) the wife shall be responsible for maintaining N otherwise when he is in Hong Kong during his undergraduate years; f) the husband asks that it be specifically ordered that his financial obligations towards N cease when he finishes his undergraduate degree and that he be permitted to fund N directly either in the States or the UK without going through the wife; E g) he shall continue to undertake to pay the following for E;
The wife’s position 21.In broad terms it is the wife’s case that there should be no change to the current maintenance order. She makes no other proposals. I am told that suggestions by her that she might be prepared to agree to a temporary reduction of maintenance were taken out of context and cannot be relied upon now given inter alia that she was not legally represented at the time. She also says that she is already paying approximately HK$65,000 per month from her own resources to maintain both herself and the children. However, she was not able to produce very much evidence to support that assertion. For example, her bank and credit card statements did not support her case on food expenses and there was similarly little or no evidence to support her case on other estimated expenses. It is also of note that her asset base has grown considerably over the last 6 ½ years. In contrast the husband has until recently been earning some income and he also sold his investment in Thailand and received redundancy payments etc, which would explain his increased asset position. Earning capacity 22.The husband originally worked in Z Research as an investment analyst. He worked for a number of well known financial institutions. As indicated above he was made redundant on the 2 June 2016. He says that he has found it impossible to find another job since. He makes a compelling argument for why this might be the case, including his age, the state of the finance industry etc etc. The wife for her part does not accept that the husband’s earning capacity has been severely compromised. She believes that he has exaggerated the situation and that his search for jobs has been half hearted at best. In contrast she points out that she has virtually no earning capacity as a Korean woman in Hong Kong with limited language skills and no work experience. For the avoidance of doubt and as before, I accept that to be the case. However, I also accept that it may be very difficult indeed, in today’s market, for the husband to find a new job in Hong Kong in the financial field and that he may need to look further afield and in different areas. Notwithstanding all of that the husband does still have a greater earning capacity than that of the wife. Given that, it does not seem to me that it would be appropriate to simply discharge the wife’s maintenance order altogether, although I do accept that it should be suspended until such time as the husband finds another job or he embarks on a new venture which is income producing. At that stage the issue of the wife’s maintenance may be looked at again. The husband is therefore obliged to inform the wife and the court in the event that he becomes gainfully employed on either a full or part time basis or he becomes involved in a venture that is income producing. He should do so, say within 4 weeks of commencing such a position. 23.I do not think it appropriate where the parties otherwise have an almost equal asset base to expect the burden of providing for the wife and the two children to rest entirely on the husband’s shoulders. It is of note that the wife’s solicitors have suggested that the husband has not been full and frank in his disclosure. For the avoidance of doubt that is not accepted. In contrast and as indicated above, I did not find the wife to have been entirely truthful in her evidence to the court. The children’s maintenance N 24.I accept the husband’s proposal with respect to N as set out in paragraphs 20 c) subsection a, c, and d above. In addition, the husband shall pay for N’s living expenses in the sum of HK$10,000 per month (i.e. HK$7,300 + HK$2,000 for the reimbursable extra-curricular activities = HK$9,300 rounded up to say HK$10,000 per month) and there shall be no requirement for the husband to reimburse N for any extra tuition or extra-curricular fees as referred to in subsection e. I have therefore added the HK$2,000 proposed to N’s proposed monthly allowance. Further the husband shall continue to pay maintenance for N in the sum of HK$40,000 per month until he goes to university in October. For the avoidance of doubt the husband is legally required to contribute towards N’s education costs until such time as he completes his undergraduate degree. Thereafter any further financial support for N with respect to further study shall be a matter for discussion between him and the parties. Further he shall make payments for and on behalf of N directly to either N himself or to the college/university concerned. 25.In so far as the provision of college/university fees is concerned given the husband’s offer, which is accepted, it is further directed that in the event that the college tuition fees are more than HK$240,000 but not greater than HK$480,000 per annum then the wife shall pay the short fall. If though the fees are less than HK$240,000 per annum, then the husband shall be entirely responsible for those fees. In the event that the college fees are more than HK$480,000 per annum then each parent shall be responsible for one half of those fees. E 26.The husband’s proposal with respect to E’s school fees is accepted. Consequently, the husband’s undertaking in paragraph 2 (ii) of the court order dated the 13 April 2013 shall remain in place. In addition, the husband’s proposed undertakings in paragraph 20 (g) d and e above are also accepted. In so far as the other expenses are concerned I accept that until such time as the husband finds a new job, that each side should be responsible for half of E’s expenses given that each side will need to pay for these from their own asset base. This means that each party should pay for one half of E’s share of the general expenses and one half of her actual expenses. What then should be regarded as being E’s reasonable expenses going forward? General expenses 27.In the wife’s supplemental affirmation dated the 23 November 2016 she set out her up to date expenses. These included her general expenses for three people as follows:
28.The husband took great exception to many of these expenses. In particular, he said that there was no need for the wife to continue to rent such an expensive property and further he pointed out that she was unable to provide evidence that she paid management fees of HK$15,300 per month – which on the face of it seemed very expensive. Likewise, he said (and I accept this to be the case) that there was no evidence that the wife paid anything like HK$20,000 per month for food. In turn he reiterated throughout that he had reduced his own expenses as much as he could. He put his own expenses for two adults, a domestic helper and a baby as follows:
29.In broad terms then the wife’s stated general expenses are about HK$30,000 per month more than the husband’s. Over HK$20,000 per month of that relates to the wife’s rental and management fees. I was provided with a copy of the wife’s current tenancy agreement after the hearing. This states that the tenancy agreement shall expire on the 30 October 2017. I accept that it would be reasonable in these circumstances to expect the wife to move into a more reasonably priced flat. This is especially since N will be leaving for college/university shortly. Consequently, I accept that the wife’s general expenses, once she has moved from her current apartment should be no more than HK$82,500 per month. In that regard I also accept that her estimate for food is exaggerated. I have consequently reduced that to HK$10,000 per month:
Of that say HK$41,250 should be attributable to E. Both parties shall contribute HK$20,625 each towards this expense. I accept that this is not an exact science, especially given the fact that N will be home over the longer college vacations. But generally speaking this seems to me to be an acceptable bench mark. E’s actual expenses 30.The wife set out the children’s expenses in her updated affirmation instead as follows:
31.The immediate difficulty with this is that this estimate is for both children. As with the general expenses the husband also takes great exception to many of these expenses. For example, he says that there is no evidence that E or indeed N had many extra tuition classes or extra-curricular activities over the years. As indicated above I accept that to be the case. He also objects to the estimate of HK$10,000 per month for medical/dental, when he has continued to pay for reasonable medical and dental expenses directly and he has offered to pay for all of N’s medical and dental expenses whilst at college/university and for 70% of E’s. He also maintains that school lunches should not cost anything like the amount claimed by the wife. Whilst that is true I would also expect both children to have received pocket money in the past and for E to continue to receive pocket money going forward. I have also taken into account the fact that this schedule should henceforth only relate to E. With all of this in mind it seems that the following schedule is probably more reflective of the reality:
Conclusion 32.Generally speaking, it seems to me that the wife should, if she is sensible, reduce her outgoings to a more sensible level, especially the rental, given that N will also be away for most of the year. As I have said it is of note that the current tenancy comes to an end on the 30 October 2017. However, I also accept that this may take some time to organize. On the premise that the husband shall continue to undertake to pay for E’s school fees and for 70% of all of her medical and dental costs and the other undertakings referred to above, I will therefore reduce the maintenance for E to HK$33,000 per month (HK$20,625 + HK$12,500 = HK$33,125 rounded down to HK$33,000 per month) but with effect from the 1 January 2018. Again this shall be on a temporary basis until such time as the husband finds a new job etc. The order in relation to reimbursement of extra tuition and extra-curricular fees shall also be discharged. Costs 33.The husband has been largely successful in his application. He asks that consideration be given for his ad hoc legal costs in the sum of approximately HK$55,000. However, given that the parties were both representing themselves for most of the time and that the wife only instructed solicitors latterly I will exercise my discretion and make an order that there be an order nisi to be made absolute in 14 days’ time that there be no order as to costs. Order 34.Consequently an order shall be made as follows: a) The Petitioner husband shall be released from the undertakings contained in paragraph 2 (i), (iii) and (iv) of the order dated the 13 April 2011. b) Further he shall undertake to make the payments for N as set out in paragraphs 20 c) subsection a, c, and d above. c) Further it is directed that N’s college/university fees shall be paid in the manner set out in paragraph 25 above. d) Further he shall undertake to make the payments for E as set out in paragraph 20 g) subsection d and e. IT IS ORDERED THAT
The Petitioner appeared in person Mr M Chan of Wong Hui & Co appeared for the Respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under FCMC 7243/2008