Cmm v. Chwk
Read the full judgment text of FCMC 11262/2020 on BabelCite. This Family Court judgment was delivered on 1 June 2022 before Deputy District Judge R Chow.
Matrimonial Causes – Variation of Interim Maintenance – Material Change of Circumstances – Ability to Pay – Financial Disclosure – Children’s Needs – Application dismissed – Costs follow the event – Respondent failed to prove change in ability to pay due to insufficient financial disclosure and inconsistent business performance data – Petitioner’s non-disclosure of nominee directorships not material change – Previous interim maintenance order not disturbed – Costs order nisi made.
Legal issues: Material change of circumstances in H's ability to pay · Material change of circumstances as a result of W's non-disclosure · Children's reasonable needs
Outcome: Application for variation of interim maintenance dismissed.
Cites 4 cases
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FCMC 11262/2020 [2022] HKFC 111 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO 11262 OF 2020 ________________________
________________________ Before: Deputy District Judge R Chow (Paper Disposal) Dates of Written Submissions: 14, 21 and 28 December 2021 Date of Decision: 1 June 2022 ___________________________ DECISION (Variation of Interim Maintenance) ___________________________ Background 1.This is an application by the Respondent (“H”) for variation of interim maintenance. 2.The Petitioner (“W”) and H were married in February 2009, they have a son and a daughter (“the Children”) born respectively in 2010 and 2012. 3.W filed a petition for divorce on 23 February 2018 on ground of unreasonable behaviour under FCMC 2113/2018, H defended and filed a Cross Petition. 4.By consent on 13 February 2019, joint custody of the Children was granted to H and W with interim care and control granted to W and interim defined access granted to H. 5.Pursuant to the Order dated 2 November 2020, W filed a petition for divorce on 1 December 2020 on ground of 2-year separation. Consequently, the children and financial matters under FCMC 2113/2018 continued in the present proceedings. 6.W by summons filed on 4 May 2018 applied for interim maintenance for the Children under FCMC 2113/2018. 7.DDJ Rita So on 8 October 2019 in her judgment under FCMC 2113/2018 (“the Judgment”) ordered H to pay W interim maintenance for the Children the sum of HK$25,000 every month from 1 November 2019 until further order (“the IM Order”). 8.H had before W’s application for interim maintenance paid HK$5,000 per month as maintenance for the Children and he continued to pay HK$5,000 every month despite the IM Order. 9.H filed on 13 May 2020 an application for variation of the IM Order from HK$25,000 to HK$5,000 per month to take effect from 1 November 2019. H’s Case 10.H is a businessman. As stated in his Form E filed on 17 May 2021, he had been a director of a number of companies in the preceding 24 months, namely MIGL, SL, ML, GCL, MCL and a PRC company. He was a 50% shareholder of MIGL and 100% shareholder of SL and the PRC company. 11.H claimed that his income was generated by his business deriving from obtaining an agent fee as an online platform in Mainland China for sale and purchase of goods among retailers and customers. 12.H claimed that his business had been running at a loss due to the trade war between Mainland China and the United States of America. There was also the social unrest. The outbreak of coronavirus further hit his business. 13.As seen in his Form E filed on 17 May 2021, H had only a monthly income of HK$25,000 based on his annual director’s remuneration of HK$300,000 from ML. Previously, H reported in his Form E filed on 9 April 2018 that his monthly income was HK$65,000 per month. 14.H had to sell his vehicle (Benz GL500) to repay loans. H had to borrow from his mother and sister for his basic monthly expenses and financial problems for over HK$2.1 million. H had outstanding credit card debts of over HK$450,000. 15.Throughout the years, H had been paying for mortgage of the matrimonial home, the monthly repayment was increased from HK$12,000 to HK$12,671.14. 16.H’s monthly expenses amounted to HK$40,171.14 per month that was over his monthly income. 17.H could not afford to pay more than HK$5,000 each month as the interim maintenance for the Children. 18.H further complained about W’s non-disclosure of her directorship in 4 companies since 26 November 2018. Legal Principles 19.The relevant principles for variation of maintenance pending suit (applicable to interim maintenance) were succinctly summarised by DDJ M Lam in TWF v HWKR (FCMC 7615/2019) at paras. 23-25 as follows:
Issues 20.The law is trite that the Court would have to consider whether there had been material change of circumstances in variation application. The Court would further consider all the circumstances of the case. 21.H relied on his decline in income and W’s non-disclosure of her directorship in 4 companies. 22.The first issue is therefore whether there had been material change of circumstances in H’s ability to pay. 23.The second issue is whether there had been material change of circumstances as a result of W’s non-disclosure. 24.The third issue should be what the Children’s reasonable needs should be. 25.As for H’s personal expenses, I consider that it is not an issue in this application. 26.H stated that his monthly general and personal expenses amounted to HK$27,800 in his Form E filed on 17 May 2021, it was HK$52,252 in his Form E filed on 9 April 2018. 27.H by evidence filed on 25 September 2020 contended that his monthly expenses amounted to HK$35,171.14 excluding the HK$5,000 that H had been paying as the Children’s monthly maintenance. 28.In the Judgment, DDJ Rita So ruled that H’s reasonable expenses should be HK$37,300. 29.The latest amount asserted by H was slightly lower than the amount ruled in the Judgment. Even if H’s latest alleged expenses were to be accepted, it would not affect H’s ability to pay. My view is that there is no need for this Court to revisit H’s monthly expenses. H’s Ability to Pay 30.When DDJ Rita So dealt with W’s application for interim maintenance, H already asserted financial difficulties and inability to pay. 31.According to H’s Form E filed on 9 April 2018, H’s family loan, credit card loans and car loan amounted to over HK$1.6 million. While the amount of liability has become higher, this is not a new ground used by H in arguing against the grant of interim maintenance. 32.H’s sale of his vehicle Benz GL500 actually took place in mid-2018, it did not happen after the Judgment. 33.The increase in mortgage repayment amount is just a few hundred dollars, it is relatively minor. 34.H remained working for the same businesses as a director earning remuneration. 35.H now claimed to have a monthly income of HK$25,000 as opposed to HK$65,000 as ruled in the Judgment. 36.H attributed the decline in his income to the downturn of his businesses due to trade war between Mainland China and the United States of America, the social unrest and the pandemic. 37.The trade war existed before the Judgment, H already used this as a reason to explain the decline in his businesses in W’s application. 38.As for social unrest and the pandemic, H made only a bare assertion that his business was adversely affected. 39.H’s business generated income from online platform in Mainland China for the sale and purchase of goods among retailers and customers, there is no evidence and explanation from H as to why the social unrest in Hong Kong would have negative impact over his business relating to online platform in Mainland China. 40.While it is true that the pandemic has adversely affected the economy as a whole on a worldwide basis, H’s business did not necessarily suffer as it counted on an online platform which might not be affected by the need for social distancing. 41.It is my view that it is not enough for H to merely cite the social unrest and the pandemic as reasons for poor performance of his business without elaboration and proof. 42.Indeed, I cannot be sure if H’s business was really doing poorly at all. 43.H has filed only the following Report and Financial Statements, majority of which are unsigned and some of which had already been disclosed for the use in W’s application for interim maintenance:
44.Ms. Li, counsel for W, submitted that H failed to disclose the necessary financial information of H’s related businesses. Ms. Li complained that H should have disclosed the financial documents from these companies for the years of 2019/2020 and 2020/2021, namely 2 years before H’s Form E filed on 17 May 2021. 45.I agree. 46.From Ms. Li’s analysis, H’s businesses actually improved in their performances in profit/loss from the financial information disclosed as follows:
47.H produced his tax return for the year of 2018/2019 and tax assessment for the year of 2019/2020 to show that his monthly income was only HK$25,000 per month. 48.However, H was the director of the aforesaid companies, especially sole director of ML where he was paid his reported director’s remuneration. 49.There is a need to see if H’s businesses were really performing poorly so that the reduction in H’s remuneration could be considered justified. 50.It would be interesting to note that H received higher remuneration in the year when ML was trading at a loss than the year that ML was trading at a profit as follows:
51.This raises a concern as to whether H deliberately reduced his remuneration for the purposes of litigation on ancillary relief. 52.Mr. Lau, counsel for H, submitted that H had made more extensive financial disclosure voluntarily compared to in the W’s application and there was a noticeable improvement on H’s part since the Judgment. 53.The extent of H’s disclosure is in my view still not enough. 54.The majority of the documents disclosed by H remained unsigned and H’s explanation for not signing some of the documents due to investigation of an alleged theft is unjustified as suggested by Ms. Li as the amount in question could be booked under a separate heading in the meantime pending future correction. 55.I am not satisfied that H has produced the necessary evidence to support that the reduction of his income truly reflected his true earning power and entitlement. 56.I do not accept that H’s income should be considered reduced. An adverse inference should be drawn against H’s alleged reduction in income and ability to pay be reason of the deficiency in H’s disclosure. 57.H has failed to prove that there is a change of circumstances in his ability to pay. 58.From the Report and Financial Statements of H’s companies, there were amounts due to directors defined either as amounts due to director(s) is/are unsecured, interest free and has/have no fixed terms of repayment/repayable on demand as follows:
59.These amounts could potentially be H’s financial resources, H has not offered any explanation on this. 60.As stated in the Judgment “that it is both the Husband’s and the Wife’s case that each of them has been borrowing money from their families. It is trite law that ability to borrow can be viewed as financial resources.” 61.I share this view. H has the ability to continue borrowing from his family and bank. 62.In light of the above, I am satisfied that H has the ability to pay the interim maintenance as ordered. W’s Non-Disclosure 63.H alleged that W had failed to disclose that she was a director in 4 companies since 26 November 2018. 64.W explained in her affirmation that she was employed as an administrative assistant since January 2018, she was transferred to work in Shenzhen since July 2019. As one of the directors of her employer resigned, she was asked to become a nominee director. As for the other 3 companies that she was appointed as a director, these companies were related to her employer and she was again a nominee director only under the same circumstances. W was not remunerated at all as a nominee director in these 4 companies. 65.Mr. Lau submitted that W had failed to produce any financial statements of these companies. 66.Allegation of W’s non-disclosure is not something new. In the application before DDJ Rita So, H complained about a bank account in W’s name that she claimed to be held merely for the benefit of her parents. 67.W in turn attacked H for non-disclosure of his companies’ financial information. 68.DDJ Rita So considered detailed investigation of the finance of the parties ought not to be conducted. Factual determination in relation to the allegations of the parties should be canvassed with cross-examination at the ancillary relief trial. 69.I agree with this approach. W’s alleged failure to produce the financial statements of the 4 companies in question is not so obvious that she was hiding her financial resources or assets thereby amounting to a change of circumstances. This matter should be dealt with at the ancillary relief trial. 70.Mr. Lau argued that since W’s alleged income was not enough to cover the expenses of the Children and her, W must be either hiding financial resources or having less expenses as alleged. 71.One of the major and obvious reasons why W would have difficulties in making ends meet is due to the fact that H has never complied with the IM Order. 72.H in effect is using his non-compliance of the IM Order to prove that the IM Order should not have been made in the first place. I find this argument repulsive and irresponsible. 73.As accepted by DDJ Rita So in the Judgment, both H and W borrowed from their families. I fail to see how W must have hidden financial resources or lied about the Children’s and her expenses just because W’s monthly income without H’s interim maintenance is not enough to cover the Children’s and her expenses when she has borrowed from her family. 74.In light of the above, I am of the view that there had been no change of circumstances by reason of W’s non-disclosure in relation to her directorship in the 4 companies or otherwise. 75.It should be noted that the responsibility to produce necessary financial statements on the part of H in this application is not the same as W. 76.This is the application by H for variation of interim maintenance. It is for H to satisfy this Court that there had been a change of circumstances in his ability to pay. From the discussion above, H has failed to discharge his duty to prove a change of circumstances in his ability to pay with the necessary documents. This Court has good reasons to err in favour of W. Children’s Reasonable Needs 77.W is working as an administrative assistant earning HK$14,250 per month which was a drop from HK$22,000 per month as seen in the Judgment. W receives government subsidies of HK$26,978 per year. 78.W in her Form E filed on 17 May 2021 claimed that her expenses and the Children’s expenses amounted to HK$39,628 per month. 79.Mr. Lau argued that by adding half share of the general expenses as DDJ Rita So did to the children’s expenses, the Children’s total expenses should be at best HK$21,343 only. 80.DDJ Rita So made her ruling on the Children’s reasonable needs in the Judgment on 8 October 2019 as HK$24,850. 81.I do not agree with Mr. Lau that we should only look at the Children’s expenses in the Form E filed on 17 May 2021. W had filed evidence for new and higher figures that we should not disregard. 82.In her affirmation filed on 26 October 2021 in opposition to H’s application, W alleged that the Children’s expenses amounted currently to HK$35,782 and would be expected to rise to HK$76,800 when the Children start to study in secondary school. 83.Even without considering W’s latest alleged figures from W, I am of the view that the amount ordered by DDJ Rita So would still be considered not far off from the figures on the Children’s expenses in W’s Form E filed on 17 May 2021. The Court would adopt a broad brush approach in determining the amount for interim maintenance, I do not consider it necessary and justified to disturb the sum ordered by DDJ Rita So. Conclusion 84.By reason of the foregoing, I find that H has failed in each and every issue and his application for variation of the IM Order ought to be dismissed. 85.H has sought herein for variation of the interim maintenance to take effect from 1 November 2019, in other words, the same date as the IM Order taking effect. 86.What H is really trying to do is to overturn the IM Order in its entirety without an appeal. 87.As quoted above in TWF v HWKR (FCMC 7615/2019) at para. 24(g), “Application for variation should not be pursued when in substance the grounds advanced for variation tantamount to re-argument of the same issues that have been argued before the court before the making of the original order.” 88.In my view, it is exactly what H is doing and ought not to be allowed. 89.H’s present application should be dismissed. Costs should follow the event. 90.I hereby make the following order:
Ms. Cindy Li instructed by Jesse H.Y. Kwok & Co., for the Petitioner (Wife) Mr. Acorn Lau instructed by Yu Hung & Co., for the Respondent (Husband) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||