Ypm v. Bcm
Read the full judgment text of FCMC 1763/2019 on BabelCite. This Family Court judgment before District Judge K K PANG.
Child maintenance – Matrimonial Proceedings and Property Ordinance – Income assessment – Expenses apportionment – Costs – Parties married 2009 with three children – Trial on child maintenance following divorce – Court determined W's income at HKD60,917.34 plus rental income and H's income at HKD95,000 – Children to remain at DBIS – School fees, medical and ECA expenses equally shared – W ordered to pay 60% of H's costs
Legal issues: W's income, earning capacity, property and other financial resources · H's income, earning capacity, property and other financial resources · Children's reasonable expenses and school costs · Apportionment of Children's expenses · Costs
Outcome: Child maintenance order made; W to pay 60% of H's costs.
|
FCMC 1763/2019 [2021] HKFC 11 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 1763 OF 2019 ________________________ BETWEEN
________________________ Coram: District Judge K K PANG in Chambers (Not open to public) Date of Hearing: 2-3 December 2020 Both parties’ Closing Submissions: 17 December 2020 Petitioner’s Reply: 23 December 2020 Respondent’s Reply: 24 December 2020 Handing Down Judgment: 29 January 2021 ________________________ J U D G M E N T (Child Maintenance) ________________________ 1.I refer the Petitioner mother as ‘W’ and the Respondent father as ‘H’. Background 2.H is Irish, now aged 45. W is US citizen, now aged 41, born and brought up in Hong Kong. The parties met at W’s sister’s wedding in 2008. At that time W was working in New York City and H was working in the UK. They were married in the US in June 2009. H moved to New York City in November 2009. The son C was born in January 2010, now aged 10 and the older daughter I was born in August 2011, now aged 9, in the US. The parties moved to Hong Kong in October 2012. While they initially lived with W’s mother, they moved to Discovery Bay (‘DB’). The younger daughter A was born in March 2015, now aged 5, in Hong Kong. The parties moved back to live with W’s mother in January 2019. On 18 February 2019, W petitioned for divorce on mild unreasonable behaviour ground. 3.By the Consent Order dated 21 August 2019, the parties have joint custody of the three children of the family (collectively the ‘Children’) with shared care and control. As a part of the agreement, the parties would move back to DB so that the Children could live in the same community and would continue their schooling in the international school (‘DBIS’) in DB. Under the agreement, H moved back to DB and rented a 3-bedroom apartment in August 2019 and W moved back to DB in October 2019. They currently have a week on/ week off arrangement with the Children. The divorce proceedings went uncontested and the Decree Nisi was issued on 6 September 2019. 4.By the Consent Order dated 25 November 2019, there is a clean break between the parties upon W transferring to H half of the balance of her US dollar HSBC account (50% of USD 150,530) and that the funds in a Bank of Ireland account (equivalent to HKD 25,150.2) belong to H, and that an apartment situated in the New York City (the ‘NYC property’) in W’s name will remain in her own name. The NYC property was gifted to W by her parents several years before marriage. 5.This is the trial on child maintenance for the benefit of the three children of the family. The parties’ open offers 6.H offers equal sharing of the Children’s maintenance that each party is responsible for the Children’s living expenses at his or her own household and the cost of the holiday they take with the Children. All other expenses are equally shared between the parties. 7.W offers that the parties should contribute to the children’s living costs based on their proportional earning capacity. She assumes that H’s earning capacity is HKD120,000 and he will therefore pay 64% towards the children’s living costs and W will pay 36%. W is working for an international school (‘WAS’) that offers free education for her Children. She suggests that the Children should study at WAS. If H refuses to let the Children go to WAS, she will not contribute towards the Children’s school fees. 8.In the Opening Submissions, her position is updated as follows:
Issues 9.Notwithstanding that this is far from being a difficult case, the parties could not reach an agreement on the List of Disputed Issues. They somehow managed to produce a long list consisting of agreed and non-agreed disputed issues that include thirteen questions and some sub-questions as follows:
The Law 10.The jurisdiction of the Family Court in granting maintenance payments for a child of the family is governed by s.5 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (‘MPPO’) which provides that the Family Court may make any one or more of an order for periodical payments, secured periodical payments, lump sum payment, secured lump sum payment for the benefit of a child of the family. 11.Section 7(2) of the MPPO sets out matters to which the court is to have regard in deciding what orders to make under s.5, which provides that:
Discussion W’ income, earning capacity, property and other financial resources 12.According to W’s Form E dated 26 April 2019, her total assets was HKD17,389,672.17, including the NYC property valued at HKD15,700,100, value of bank accounts HKD1,210,452.56 and pensions valued at HKD479,119.61 and her liabilities was HKD179,111.26 including credit card debts of HKD121,887.26 and debts to her mother of HKD57,224, with the net value of HKD17,210,560.91. In her Form E dated 30 June 2020, she stated that the value of the NYC property and the value of bank accounts were dropped to HKD11,829,648.6 and HKD27,709.14 respectively while her liabilities were increased to HKD606,814.4, including debts of HKD467,540 to her family, outstanding legal fees of HKD95,000 and credit card debts of HKD14,274.4 The net value was HKD11,759,348.89. 13.Upon moving to Hong Kong, W took a period out of work. In April 2013, W started to work at a hedge fund and was earning a monthly salary of around HKD50,000 plus bonus. W quitted the job within two months. W then took a position with a law firm with a salary of HKD65,000 per month and had continued to work there for some years. She then quitted her job and later took a position with a hedge fund and was earning around the same when she was at the law firm. She left the position with the hedge fund in about a year. W then worked at another hedge fund and left that position within a year. She received a sign-on bonus of HKD50,000 and a departure bonus of HKD100,000 from the previous employer. In March 2020, W moved to work for an international school (‘WAS’) in Aberdeen as an international executive coordinator with a monthly salary of HKD60,917.34. 14.As stated in W’s Form E dated 30 June 2020, apart from the one time sign-on and departure bonus from her previous employer, her income is HKD60,917.34 per month plus the net NYC property rental income of HKD7,911.06 per month. As she is working in education, there are no bonuses given. W and the Children are covered by work medical insurance. Although not in her employment contract, W has been offered free education for the Children subject to their passing the entrance examination, which they did on 24 April 2020. 15.W’s net rental income of the NYC property is HKD7,911.06 per month, the breakdown of which is set out in her updated Form E at 3.6. H contends that W understates her NYC property rental income. He adduces some information downloaded from the internet as evidence upon which he relies in support. It is noted that the information available is only the asking price given, not the amount at which a subject apartment is actually rented out. W explains that the pandemic has had serious repercussions on the real estate market in Manhattan in New York, and after her previous tenant broke his lease and left the apartment, W is very lucky indeed to be able to get it rented sight unseen during lockdown in New York. The rental value is confirmed by W’s letting agent, a real estate agent in USA in a letter to W dated 18 September 2020. It is confirmed that due to the pandemic, the NYC property has to be let unseen and that W is lucky to let the NYC property for USD6,750 per month. After having carefully considered the evidence, I accept that the rental income reflects the current market rental price. Even so, I take the view that she may be able to obtain higher rental income than that she is receiving when the pandemic is over.. 16.H disagrees the following items of expenses for the NYC property in 2020, to wit, tax prep of USD840 and extra fees of USD10,942.34 including moving fees of USD808.5, painting of USD 3,320, cleaning of USD738.84 and broker fee of USD 6,075. W explains that she would not need tax prep if she did not have a renting property. W accepts that usually broker fees are paid by the prospective tenant but explains in the present case that two estate agents were acting jointly and the tenant paid for one agent and W paid for the other agent. I accept her explanation in the above. W has no quarrels about H’s contention that moving fees, painting and cleaning are usually paid out of or set off against the tenant’s deposit. If the said extra fees of USD10,942.34 is added back, her net rental income will be increased by USD10,942.34x7.8÷12 = HKD7,112 per month. When the pandemic is over, probably W will rent out the NYC property at higher rent. 17.W was employed in a private capacity for a partner (‘Mr. PS’) of her previous employer, in which W earned £25 per hour. W gives evidence that her employment with Mr. PS ended in January 2019. H through solicitors asked W to provide details of the amount of income, duration of employment, payroll records and bank account details to which her income is deposited and, if she maintains that she no longer works for Mr. PS, further that she provides a written confirmation from Mr. PS on when she ceased working for him and the last payment date. In the absence of a response from Mr. PS, he invites the court to draw an adverse inference against her on undisclosed source of income. W gives evidence that all of the money she received from Mr. PS were paid by bank transfer and were included in her Form E and bank statements. Although W has not provided Mr. PS’s written confirmation as requested, after having carefully considered W’s evidence in the above and her bank statements adduced, I accept that W has ceased working for Mr. PS. 18.In short, I accept that W’s current income is HKD60,917.34 per month plus the net NYC property rental income of HKD7,911.06 per month, despite that W will probably have higher rental income in the longer term. 19.W is from a wealthy family. W’s parents divorced in about 2012. W’s mother has told H that she received USD50 million divorce settlement. During the marriage, the parties have had the benefit of W’s family resources. H contends that W has access to substantial financial resources from her parents for the Children’s maintenance. H gives evidence that W’s mother and him spoke about the idea of setting up a trust and inheritance provision some time ago and he was allegedly asked for the Children’s passport details by W’s mother. H accepts that the discussion taken place is in very general terms. In the premises, I take the view that the evidence on which H relies in support of his case is weak. W gives evidence that no trust has been set up in her or the Children’s favour and no inheritance provisions have been made for her or the Children. After having carefully considered the evidence, I do not accept that W has access to substantial financial resources from her parents for the Children’s maintenance. 20.W’s monthly general expenses, personal and Children expenses are HKD58,428, HKD20,328 and HKD34,890 respectively, totally HKD113,646. H’s positions on the expenses are as follows:
General
Personal
Children Expenses proposed to be shared by the parties
Expenses proposed to be borne by W
21.About W’s general expenses, the difference between the parties is HKD3,300. H contends that her expenses on food (HKD13,000) and meals out of home (HKD5,200) add up to HKD18,200 per month are excessive. I accept that W’s food expenses should be reduced to the same amount that H is spending i.e. HKD10,000 per month. There should be no gainsaying the modest sum of HKD300 per month for dry cleaning and donations. I take the view that W’s general expenses should be HKD55,428 per month. 22.As to W’s personal expenses, H accuses W of having prioritised spending on her own lifestyle over contributing to essential costs for the Children, such as using her financial resources to take vacation with her friend to Cambodia while she told DBIS that she could not afford to pay afford to pay HKD3,200 additional costs of her share of the Children’s monthly expenses. W disagrees. Despite that it is not disputed that the parties and the Children lived a comfortable standard of living during the marriage, expenses have begun to mushroom as soon as the divorce process has started. Legal fees, new living expenses and myriad other costs has drained the parties’ financial resources. Money previously used to support one household must now stretch to support two. It is obvious that the parties must start to face the reality that they and the Children may need to lower their living standard. I take notice that most of those expenses are flexible. Having carefully considered the evidence, without going to have an item by item review on W’s personal expenses, I take it that W’s personal expenses should be reduced to the same amount of what H is spending, i.e. HKD14,267 per month. 23.W’s children expenses proposed to be shared by the parties are HKD18,005, including school fees (50%) HKD12,100, extra tuition fees HKD801, Medical/ Dental (50%) HKD2,494 and various ECA HKD2,610. 24.Though both parties accept that 50% of the Children’s school fees is HKD12,100, it is worthy of noting that W’s primary position is that she will not contribute to the Children’s school fees. W argues that the Children should go to WAS where the Children will have free education. The older daughter, I will have only one more year before she graduates. The younger daughter, A being troubled by the ongoing divorce has been receiving counselling in DBIS. C and I The older two children have adamantly said that they do not want to go to WAS as they want to stay with their friends. I take notice that it has been the parties’ agreement that the Children will continue going to DBIS. Having carefully considered the evidence, I agree that it is in the best interest of the Children that they remain at DB. The Children should go to school in DB for the time being. 25.W agrees that none extra tuition is now taken. 26.H contends that W has overstated the medical/ dental expenses as most of the expenses are covered by her work insurance and that her medical/ dental expenses should be reduced to HKD700 per month. It is undisputed that there are out of pocket expenses. Having carefully considered the evidence, I accept HKD2,000 per month for the medical/ dental expenses, 50% being HKD1,000 per month. 27.Both parties position is that each child should not attend more than one private ECA as DBIS offers free ECA. The free ECA has been suspended during the pandemic and thus the Children has had some extra private ECA. When it is over, expenses on ECA can be reduced. I accept HKD2,400 per month for the Children, i.e. one private ECA estimated at HKD800 per month for each child, 50% being HKD1,200 per month. 28.Accordingly, the Children’s expenses proposed to be shared by the parties are HKD14,300 for each party. 29.W’s own Children’s expenses are HKD16,885. H contends that the expenses should be reduced to HKD7,480. W has provided explanation of the expenses in her Scott Schedule. I take notice that most of the expenses are flexible. Having carefully considered the evidence, I accept that W’s claim is excessive and I prefer H’s figure of HKD7,480. 30.In summary, W’s monthly expenses are HKD55,428 + 14,267 + 14,300 + 7,480 = 91,475 per month. H’ income, earning capacity, property and other financial resources 31.According to H’s Form E dated 30 May 2019, his total assets was HKD659,614.07, including his 100% interest in a private Hong Kong company valued at HKD12,000, value of bank accounts of HKD622,325.27 and interest in debts owed to him of HKD25,288.8 and his liabilities including credit card debts, legal fee and payable tax were HKD83,446.37, with the net value of HKD576,167.7. In his Form E dated 30 June 2020, he stated that his assets were dropped to HKD20,095.37 and his liabilities including credit card debts, legal fees and payable tax were HKD56,659.61, with the negative net value of –HKD36,600.24. 32.After the parties moved to Hong Kong in 2013, H started to work with an international company (‘STIAL’) in Hong Kong. As a result of the high costs of living in Hong Kong, the parties have have discussions about moving to the UK. H suggests that the parties had decided to move to the UK at the end of the school year in July 2019, to which W disagrees. After having worked for STIAL for about 5 years, in or about November 2018, as part of his plan to start a new lift in the UK H cashed out his MPF funds of about HKD220,000 on the ground of his permanent departure from Hong Kong in anticipation of the move to the UK and he quitted his job with STIAL and invested about HKD150,000 to start up a consultancy and contracting company in relation to sports servicing. In February 2019, he was served with divorce papers. The divorce came as a complete shock to him. As a direct consequence of these divorce proceedings, he abandoned his plans to start new business and the money that was invested in the new business was wasted. In May 2019, he returned to work with STIAL as the operations manager, with the salary of HKD120,000 per month. 33.In July 2019, the parties reached an agreement on joint custody, shared care and control of the Children. H soon after informed his employer the details of the agreement whereby he would have the children every other week. Subsequently in August 2019, his employer reduced his salary to HKD95,000 per month as he was not able to commit to the extent of travelling required for his role and they had to find someone to replace for some of his areas of work. W is incredulous at his account of the reduction of his salary, despite that he has supplied W with the revised employment agreement and a confirm letter from his employer and has also disclosed his salary payment slips and the salaries tax return. It is W’s conjectures that H has a very close working relationship with the CEO of the company and it is highly likely he has asked for the documents to be falsely generated to support his case in the divorce proceedings. Were W’s conjectures true and correct, H and his employer would have been guilty of perjury. I take the view that there is no acceptable evidence produced in support of her conjectures, despite that W is making a serious accusation against H and his employer. I have no hesitations in rejecting W’s case. Having carefully considered the evidence, I accept that H’s income is HKD95,000 per month and W’s suggestion that H’s salary can somehow ‘jump back’ to HKD120,000 is unrealistic. 34.W argues that H has access to substantial financial resources from H’s parents. I take notice of H’s Closing Submission that there is no mention in W’s narrative affidavit of any alleged family resources from H’s parents. On the contrary, in her narrative affidavit, W was sceptical about if H’s parents would contribute financially to the Children’s maintenance. H has asked W for the Children’s US Social Security numbers. W argues that it indicates that his parents were about to set up a trust or similar financial instrument for the benefit of the Children. H gives evidence that he has no knowledge of his parents’ intention. The family used to receive payments of €3,000 from his parents from time to time. In Irish, one can give any family member €3,000 tax free in a year. It is his guess that it may be that they wish to put the payments of €3,000 in a tax free structure. His parents are retired and are living on a combined pension of about €50,000 per annum. Apart from having a house in Dublin, his parents do not have other assets. Looking at the evidence in the round, I take the view that W’s case in this matter is scanty and I accept that H does not have financial resources from his family that I should take into account. 35.H’s monthly general expenses, personal and Children expenses are HKD62,500, HKD14,267 and HKD24,650 respectively, totally HKD103,417. W’s positions on the expenses are shown in W’s Scott Schedule as follows:
General
Personal
Children Expenses proposed to be shared by the parties
Expenses borne by H
36.As shown in her Scott Schedule, W has disagreed most items. It turns out that the only real issue is H’s rental costs. H moved back to DB in August 2019. He rented a 3-bedroom apartment next to the Children’s previous home at HKD52,000 per month as compared to HKD45,000 that the parties paid prior to their separation for an almost identical apartment. He explains that as he was forced to rent on short notice so that he had to rent at a time when the Marina Club was closed and their residents were looking for housing. This caused the demand for property to go up and the price to rise. By negotiation with the landlord, H has procured the reduction of the rent to HKD40,000 per month. H has produced the provisional tenancy agreement dated 8 July 2019 and the unsigned revised tenancy agreement dated 14 November 2020. 37.W takes issue on his account on having had to pay a higher rent. A notice by the Marina Club showed that the Marina Club was closed on 31 December 2018 and all services were ceased and licence agreements terminated. As regards H’s contention that the boats were given time to move out, W argues that this was not the case as shown by an article in SCMP on 30 December 2018. It stated that fewer than 10 of the 200 houseboats docked at the marina remained and most of them planned to leave by the end of the year. W argues it is clear from the evidence that the Marina Club closed a long time before H signed the agreement for lease and even then only a few boats were there. In the circumstances the closure of the Marina Club did not increase the market price. W concludes that he deliberately increased his outgoings and reduced his salary to put himself in a position that he cannot pay towards W’s expenses when the children are with her. During cross-examination, without evidential basis, W went as far as putting that the unsigned revised tenancy agreement produced is a forgery, with which H vehemently disagreed. It should be beyond dispute that H was in a hurry to rent a place so that the Children could settle down as soon as possible prior to the beginning of school in DB. At the same time, I take the view that despite that the closure of the Marina Club was taken place about 6 months before, I should not rule out the possibility that the continuing and spreading result of the closure caused the demand for property to go up and the price to rise at that time. I see no reason to doubt the authenticity of the provisional tenancy agreement dated 8 July 2019 that apparently was signed by the landlord and H as the tenant and witnessed by a professional property agent. Against such backdrop, I prefer to accept the veracity of the provisional tenancy agreement dated 8 July 2019 and as a corollary the unsigned revised tenancy agreement dated 14 November 2020. On the whole, I reject W’s case. 38.W’s comments on the expenses are set out in her Scott Schedule. Having carefully considered the evidence, I take the view that H’s monthly expenses by and large are acceptable. Accordingly, I accept that H’s monthly expenses are HKD101,417. Debts 39.W gives evidence that her father lent her HKD406,500 and her mother lent her HKD267,979 for among other things her legal fees. W produces some promissory notes evidencing her liability to her parents. They provide that the loans are repayable by 36 months from the signing and if not paid on time interest is payable on the outstanding sum at 2% per month. H gives evidence that he borrowed from a company registered in Dublin (the ‘lender’) the sums of €27,500 and €16,500 on or about 20 August 2020 and 30 November 2020 respectively and he is liable to repay the sums of €35,000 and €19,000 on the stipulated repayment date. H produced the loan agreements evidencing his liability. He gives evidence that the said loans are commercial loans on commercial terms, recorded in the lender’s books of accounts. It is undisputed that the lender is a company wholly owned by his aunt and uncle, who are the only two directors of the company. Despite the parties’ contentions to the contrary, I take the view that the parties’ debts and loans are ‘soft loans’ advanced to the parties by close family members. I do not believe that the said debts and loans have any present and clear impact on the parties’ ability to pay the Children’s maintenance. Having regard to all circumstances, how should the Children’s expenses be apportioned between the parties 40.I have turned down W’s case that H can earn as much as HKD120,000 per month and I have accepted that the Children should go to schools in DB. Accordingly, I reject W’s open offer. H offers equal sharing in the Children’s maintenance in that each parent is responsible for the Children’s living expenses at his or her own household, and that each parent is responsible for the costs of the holiday they take with the Children and the other expenses are equally shared between the parties. In view of the shared care arrangement in place, I accept that it is reasonable that each parent should be responsible for the Children’s daily living expenses and the costs of the holidays they take with the Children and the Children’s school fees, medical/ dental expenses and ECA expenses are to be equally shared. The parties have sensibly agreed that C will attend YMCA Secondary School in DB, which will reduce his school fees, once he finishes primary school this year. 41.In the circumstances, W’s monthly expenses are HKD55,428 + 14,267 + 14,300 + 7,480 = 91,475 per month. I have accepted that W’s income is HKD60,917.34 per month plus HKD7,911.06 per month. Despite that I take the view that W will have higher rental income in the longer term, W is now in deficit in terms of monthly income and expenses. W has the NYC property that is valued at not less than HKD11,829,648.6. Despite W’s arguments to the contrary, I accept that if necessary she needs to sell the NYC property in order to make ends meet. 42.H requests W to reimburse him half of the school development levy and ECA that he paid and government subsidies that W received. W disagrees. There are differences between the parties about how much each of the parties actually paid for the Children’s expenses such as ECA over the years. To deal with H’s request in the above properly, it will be necessary to have an overview of the Children’s expenses such as school fees, medical/ dental expenses and ECA expenses over the years and how much each party has contributed to them so that the court can consider whether there is any overpayment or underpayment and whether it is fair and just to make any adjustment. To pursue this, an order for the taking of account and inquiries under Order 43 of the Rules of the High Court may be required. Having carefully considered the circumstances, however, I take the view that the sums in dispute are small and it is not worthy to have a retrospective investigation on the disputes. I let bygones be bygones. Disposal 43.It is ordered that:
Costs 44.Despite that by and large, H can be regarded as the successful party, I take notice that not all of his contentions are accepted. Having carefully considered the circumstances, I order nisi that W shall pay 60% of H’s costs of the children maintenance including reserved costs, with certificate for counsel, to be taxed, if not agreed. The order nisi becomes absolute 14 days after the order is made unless a party has applied to the court for varying the order. 45.Section 18 declaration.
Jamison, Solicitors for the Petitioner Mother Ms Vivien Leung instructed by Ip & Heathfield, Solicitors for the Respondent Father |