Mcyp v. Cwyw
Read the full judgment text of FCMC 11432/2018 on BabelCite. This Family Court judgment was delivered on 9 December 2022 before Deputy District Judge J. Chow.
Matrimonial Causes – Discharge of Undertaking – Credit Card Spending – Material Change of Circumstances – Standard of Living – Whether court can vary undertaking – No, court can only discharge and replace – Whether material change of circumstances exists – No, husband has ability to pay – Whether luxury spending part of lifestyle – Yes, consistent with high standard of living – Summons dismissed, undertaking replaced with HK$300,000 limit, costs to petitioner
Legal issues: Power to vary undertaking · Material change of circumstances · Standard of living and maintenance needs
Outcome: Summons dismissed. Undertaking discharged and replaced with HK$300,000 monthly limit on specified credit cards.
Cited by 1 case · Cites 5 cases
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FCMC 11432/2018 [2022] HKFC 262 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER FCMC 11432 OF 2018 ----------------------------
---------------------------- Coram: Deputy District Judge J. Chow in Chambers (by paper disposal) Date of last written submission: 28 October 2022 Date of Judgment: 9 December 2022 ---------------------------------------- JUDGMENT (Discharge of Undertaking) ---------------------------------------- Introduction 1.This is an application taken out by the petitioner (“the husband”) by way of a summons filed on 23 November 2021 for discharge of an undertaking made by consent and to replace it by a different one. The respondent (“the wife”) opposed and asked for the original undertaking to remain in place. The application 2.The subject undertaking was ordered in Recital J of the consent order made by DDJ Rita So dated 30 November 2018 (“the Consent Order”), the exact undertaking was reproduced as follows:
(“the Undertaking”) 3.The husband now seeks an order to discharge it with a replacement as follows:
(“The New Undertaking”) 4.The wife did not take issue on the situation that the number of credit cards from 4 to 2, the dispute here is that the wife is resisting, the husband to reduce the monthly spending limit from HK$300,000 to HK$100,000. 5.This concerned her because the husband had already failed to pay the amount ordered by DDJ R. Chow in his judgment dated 17 January 2022 regarding an upwards elevation of maintenance pending suit from HK$120,000 to HK$180,000 coupled with a backdated amount of HK$1.173 million. As at the date of the wife’s affirmation filed on 21 April 2022, the husband has only paid up HK$351,900 to the wife. Legal principles 6.Prior looking into the parties’ background and the reasons of application, I shall visit the law on discharging or varying undertakings. HHJ Melloy summarized the principle in FHP v. YPY (formally known as YSL) FCMC 15966 of 2010 / [2019] HKFC 296 at paragraphs 15 – 16:
7.In an unreported case HMSE v JJS [2019] HKFC 55, FCMP 70 of 2008 where my sister judge, DDJ Rita So summarized the same issue and said as follows, without limiting the situation identified below, the court may always accept an undertaking or discharge it, if it is just and reasonable to do so.
8.In addition, HHJ Melloy stated in paragraph 22 in D, M v. D, R (also known as R, R) (FCMC 1968 of 2009; [2021] HKFC 48) which concluded the whole idea of the above principles:
Overview 9.This is a highly conflicted case, the husband petitioned for a divorce after 23 years of marriage. The husband’s family has been running a business in the financial industry which also involved substantive land developments. The founder of the family business, i.e. the father of the husband, passed away in the 1980s, the family wealth was inherited by the husband and his siblings. It is beyond question that the husband and wife have enjoyed a very high standard of living, both during marriage and after separation, and that has been exclusively provided for by the husband or his family. The wife had become a housewife after marriage. They have 3 children, namely 2 sons and 1 daughter and all are now above 18 year of age. The husband’s reasons to vary Delay in fixing an FDR 10.The husband says this application was instigated by the wife’s excessive expenditures, particularly on jewelries since the Consent Order, he has to put a halt to the wife’s lavish spending pattern. The Consent Order was sought after a successful mediation and the husband sees the content therein was concluded on an interim basis with very generous maintenance (which has exceeded the living standard) to the wife. With a view to settle the ancillary relief expeditiously, the husband anticipated a financial dispute resolution (“FDR”) will be fixed soon after the Consent Order. However, it turned out to have been delayed by the wife’s two interlocutory applications. The husband put an effort to oppose the said two applications and as at the date of handing down this judgment, the said two interlocutory applications are still on foot. 11.The wife argued by saying firstly, the Consent Order did not conclude lightly, both the husband and herself had gone through various sessions of mediation. Not to mention both parties were represented, it took almost one month to settle on an interim basis. 12.On this point, it is irrelevant here to consider how the Consent Order was granted, be it as it is undesirable that the petition as not yet reach FDR stage, I should say it is expected such interim order shall be continued until further order. The husband’s difficult financial position 13.The husband put forward his change of circumstance since the Consent Order by saying his financial position has been deteriorated. To name it, the husband’s overdraft facilities have increased from –HK$1,878,926.17 as at 28 September 2018 to –HK$5.65 million as at the date of filing this summons, i.e. 23 November 2021; debts owed to his family company have also increased from HK$963,000 in early 2019 to over HK$11,343,000 now. To meet the wife’s maintenance pending suit payments, he sold a property in Kennedy Town. Albeit the husband’s total assets amounted to HK$370.5 million, he said it is nevertheless a minority interest in the family company and of which he is unable to liquidate most of it. 14.On the other hand, the wife sees there is no material change of circumstance on the part of the husband. The wife rebutted by saying firstly, the family company was the husband’s financial resources, his overdraft facility with the family company has not been exhausted. Secondly, when the husband has incurred a monthly expenses as high as HK$1.182 million, the family company has been paying the husband HK$413,166 plus HK$50,000 director’s fee monthly to the husband. The husband’s financial means was grossly underestimated because the so-called loan from the family company was not genuine liability. 15.I should say in the outset I accept the wife’s argument that the husband was nowhere in financial difficulty. The husband came from a wealthy family and that the family company / business will finance his expenses by advancing loan(s) to him. The wife has rightly pointed out that the indebtedness or borrowings only show his financial ability to attain continuous flow of financial support from his family. Although the husband may not be able to liquidate his share in the family company at this stage, it has no bearing on his financial ability to settle credit card bills at interim stage. 16.I find the husband has ability to pay, be it the loans advanced by his family company / business might have been elevated, it does not affect his true financial position. The wife’s spending on jewelries and lavish items 17.The husband complained the credit card bills have reflected the wife has spent mostly on jewelries, in particular, in an attempt to use the Hang Seng Bank credit to purchase a Cartier diamond bangle in February 2019; Citibank Premier Miles credit card to purchase a diamond bracelet in March 2019 and 2 purchases in sum of HK$40,000 and HK$30,000 on 19 March 2019. Moreover, the husband was frustrated to learn the wife’s spending habits which were beyond her needs but mostly and disproportionately on lavish items. The husband recalled there were occasional purchases on high end items from auction house but he did not recall regular purchase of jewelries does not form part of the lifestyle during marriage. He was particularly dissatisfied to learn the wife had purchased 5 Rolex Daytona for the children in sum of HK$204,000 between March 2020 to July 2020. 18.The wife has once complained the transaction of the credit cards cannot be put through, the husband says it was the wife herself who has breached the Undertaking by spending over HK$300,000 per month and that rendered her subsequent transactions been rejected. To ease the wife’s complaint, the husband gave her a new HSBC Red credit card with a limit of HK$360,000, having done so, the wife had continued to complain her difficulty in using them. 19.The husband believes the wife’s spending on credit cards during marriage was mostly below HK$200,000 or sometimes as low as HK$10,000. The husband sees the wife’s conduct in light of using the credit card was done purposefully to maximize her needs in this suit. From this, the husband seriously reconsidered the wife’s needs and had come to a figure of HK$71,000 per month on her needs (excluding accommodation, jewelry and Chinese herbal medicine), jewelry items should be excluded to be part of the wife’s needs. 20.The wife denied the husband’s allegation and had explained her use of credit cards was to replace direct or indirect payment by the husband during marriage. To name a few, dinner out and expenses on vacations were mostly paid by the husband. She mentioned it was a usual practice that the husband will supply cash to her mostly around HK$50,000 upon demand. Apart from this, the wife was allowed to have access to the safe at home for cash. The wife’s spending, including extinguished art pieces, were paid or arranged by the husband’s secretary, the husband will arrange reimbursement according to her request. 21.The wife had a chance to analyze her credit card spending from January 2013 – November 2018 (prior to the petition) was HK$278,246 per month excluding children’s clothing, entertainment and grooming. When the above payment arrangements by the husband are no longer available to her after separation. She can only spend with the credit cards provided by the husband. After the petition, she had been deprived with sponsorship of luxury clothing, jewelry and evening gowns from luxury brands such as Dior, YSL, Gucci and Louis Vuitton for maintaining a positive image as a celebrity wife. She lost such benefits after separation with the husband and has to pay for the items herself, for instance, an evening gown from Dior costs more than HK$100,000. 22.A step forward, the wife rebutted the spending on jewelry for both herself and the husband was regular and recurring during marriage. The husband did not dispute on this point by agreeing, by February 2017, he has spent on jewelry for the wife as high as HK$69,067,395. The luxury items / personal valuables disclosed for the purpose of this divorce suit is more than 90 items, half of them were valued more than HK$300,000 per piece. The wife emphasized these items are not exceptional pieces but purchased on a regular basis which reflects their lifestyle and standard of living. 23.The wife further compared her “interest” in purchasing jewelries to the husband’s purchase of expensive cars and Patek Phillip watches. She emphasized on the lifestyle prior to separation by referring to “a basket of car keys” at the matrimonial home, mostly Porsche GTS, Astor Martin, where the husband could choose any car to drive for the day the same way as the wife could choose to anything to wear from her wardrobe. 24.The wife also recalled she has taken part in jewelry design courses towards a gemologist. She was not aware of the husband’s objection in doing so, when he had been supporting her financially during marriage with free rein spending. 25.For now, when the wife is only allowed to have a credit limit of HK$300,000 per month, she has to purchase jewelry cautiously from various shops. She could not get extinguish pieces from Christie’s or Sotheby’s as before. The wife explained the purchases of Rolex watches was meant to be graduation gifts for the elder son. 26.The wife complained the husband is making her difficult and embarrassing in using the credit cards. She denied overspending with the credit cards because she had kept a good record of expenditures because she was required to submit the receipts to the husband’s solicitors from time to time. There are occasional slight overspendings but she has tackled it by reducing the excess amount in following months. 27.The wife concluded by saying the husband has formally become the chairman of the board of directors of an established charitable organization. He is expected to make handsome donations which is likely more than HK$1 million. The wife believes the husband has no financial difficulty in continuing the 2018 Consent Order, in particular, providing her with a credit limit of HK$300,000 per month. 28.On this point, I am with the wife that the spending pattern has not changed but the mode of spending has been altered after the petition. I pay special attention to the parties’ lifestyle and the background of the husband’s family business, it certainly stands out from family that are difficult with necessities, the wife is entitled to be maintained at a very high standard of living. I agree with wife that purchase of luxuries are part of her lifestyle prior to separation, they are regular and recurring expenditures. The above is in line with HJFG v. KCY which thereby decided in big money cases, the maintenance is to enable a spouse to be maintained in highest standards and in addition to funds for other forms of expenditures which may not properly classified as “maintenance”. In this respect, as compared to the wealth of the husband, HK$370 million stated in Form E, some purchase of jewelries or capital spending are within their norm. Outcome 29.In the premises, I am not satisfied the husband has demonstrated a material change justified a discharge of the Undertaking. With no change of financial ability on his part, it is fair for the husband to maintain the same credit card limit of HK$300,000 as agreed in the Consent Order. 30.The Undertaking shall be discharged and replaced by the following:
Costs 31.Costs should follow the event, I make an order on costs on a nisi on costs that the husband to pay the wife’s costs of his summons, with certificate of counsel, to be taxed if not agreed. This costs order nisi be made absolute within 28 days from the date of this judgment in absence of party to vary by summons. Orders 32.With reasons of the foregoing, I make the following orders:
Mr Jeremy Chan instructed by Messrs. Rita Ku & Ser for the petitioner Ms Anita Yip S.C and Ms Lily Yu instructed by Messrs. Chaine Chow & Barbara Hung for the respondent | ||||||||||||||
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