Leyy v. Ukwk
Read the full judgment text of FCMC 1393/2015 on BabelCite. This Family Court judgment was delivered on 15 February 2023 before Her Honour Judge Thelma Kwan.
Variation of Maintenance – Consent Order – Material Change of Circumstances – Ability to Pay – Costs – District Court – Matrimonial Proceedings and Property Ordinance (Cap 192) s.11 – Respondent claimed unemployment but had new employment – Court found no drastic change of circumstances – Respondent had ability to pay – Application dismissed – Costs awarded to Petitioner
Legal issues: Material change of circumstances · Ability to pay · Level of maintenance reasonable
Outcome: VOM Application dismissed. H held to undertakings under 2020 Consent Order.
Cited by 6 cases · Cites 3 cases
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FCMC 1393/2015 [2023] HKFC 37 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 1393 OF 2015 ---------------------------- BETWEEN
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------------------------------------------------------------ J U D G M E N T ( Variation of Maintenance ) ------------------------------------------------------------ This Application 1.On 3 November 2021, Respondent Husband (“H”) applied to vary a Consent Order made on 20 November 2020 (“2020 Consent Order”) for maintenance payment for his only daughter A (“VOM Application”). 2.A was born on XX March 2012 and will be 11 coming March. 3.The 2020 Consent Order provides for:
4.The number of instalments was designed to be paid up on A reaching age 18. 5.H’s VOM Application asks for the lump sum of $3,000,000 to be reduced to $1,100,000 to be paid over 100 months with instalments reduced to $11,000 per month. He also seeks to be released from his undertaking to pay for school fees and asks that these be shared with W. Parties background 6.Petitioner Wife (“W”) is 43 and H is 45, they were both born and grew up in the UK. They met there and moved to HK in 2007 when H’s then employer posted him here. 7.W now works for an insurance company and earns $83,000 a month. She is in a relationship with a long-term partner T (“T”). 8.H claimed to be self-employed on a consultancy business under his own company SIC in his Form E dated 19 January 2022, but declared he has only limited income from this business; he also declared $20,000 rental income from his investment property in the UK. He is in a relationship and has moved from Saikung to live with his girlfriend in a Jardines’ Lookout apartment in October 2021 with rental of $59,000 which he claimed he shares with her. He says this is to economize and his girlfriend is helping him out with sharing the costs of living. 9.Some more background to this case has been laid down in a judgment by HHJ Melloy on 19 March 2020 regarding A’s care and control when the Judge changed A’s residence from H to the W, and gave her sole custody care and control (“March 2020 CC Judgment”). Proceeding History 10.W petitioned for divorce on 23 January 2015, Decree Absolute was pronounced on 15 June 2015. 11.By an Order made on 20 April 2015, the parties have joint custody of A, care and control to H and W has reasonable access. 12.In Feb 2018, W applied for sole custody care and control of A, with defined access to H. A 7-day trial (“Care and Control hearing”) resulted in the abovementioned March 2020 CC Judgment. H’s access to A is now under professional supervision and limited to remote access only. 13.On 28 May 2020, a costs order was made against H on the Care and Control hearing. 14.A Consent Summons was filed on 18 November 2020 leading to the 2020 Consent Order which was made on 20 November 2020. 15.W applied for relocation to the UK in her Summons dated 25 April 2022. H originally opposed but finally conceded at the PTR on 18 October 2022 after having read the Official Solicitor’s report which reveals that A wishes to go to the UK with W and her partner T. 16.The VOM Application was heard for one day on 22 November 2022 with H giving oral evidence. H’s case 17.H claims to be in “substantial distress and emotionally lost” after losing A’s custody care and control to W, and that the court case has destroyed the family’s wealth. 18.In his opening submission, he states the following as reasons for the VOM Application:
19.H further says the November 2020 Consent Summons was drafted by W’s solicitors who added in his obligation to pay for A’s school fees and school bus fees without his agreement or notice as he was self-represented. He then contends that payment of school fees of $16,475 on top of the $28,302 was excessive. 20.His previous employment was with an international financial institution earning $2.4M annually, he was made redundant and has been unemployed since November 2019. 21.In support of this VOM Application, H says he could not find work. 22.He said SIC, his consultancy company has made considerably less income than expected and declared in his Form E that the gross revenue therefrom was $158,180 for 2021. This translates to $13,181.66 per month. 23.As H has not been paying regularly for the school tuition, he came to an agreement with A’s school in late 2021 for the school debenture to be sold and the proceeds used to pay school fees. 24.H resumes employment on 17 March 2022 with a company called F Limited (“F HK Ltd”) where he is currently making $140,000 per month; but did not reveal this new employment to the W until November 2022. 25.He complains that the expense for A is excessive but proffers no counter numbers. H says as A will be enjoying free education in the UK, her expenses can be adjusted down further. 26.His opening submission focuses on comments / criticisms on W; H also claims that she has been benefitting from the maintenance he pays for A. 27.On the morning of the hearing, I seek to confirm what H wants to do having considered the W’s submission, and my indication that he has very high hurdles if he is seeking to vary the $3,000,000 lump sum. He eventually conceded that he will not be seeking a variation of the lump sum, but asks to pay an instalment payment that he can afford. Parties were directed to see if they could attempt to mediate the amount but failed. W’s Case 28.W objects to H’s application. 29.W says that following the Care and Control hearing, there were difficulties with H’s payment of school fees for A, and W has hoped to resolve matters with H with the Consent Order. W says that when she accepted a lump sum payment for A, it was because a lot of time and money has been spent on the Care and Control hearing, and she felt that there was a need to have some finality and certainty. She also says that in agreeing to the lump sum for A, she has foregone any chance of maintenance adjustments for A resulting from costs of living increase, accepting that she will bear the brunt of inflation, and acknowledging that she will not be able to change this lump sum payment for A. 30.W says that at the time of the Consent Order, she acceded to H’s ask for 6 months stay before starting payment; which is why the Consent Order made in November 2020 ordered payment to commence in June 2021. 31.But H only paid for three months from June to August 2021, stopped payment, and took out this VOM Application. At the time of this hearing, the outstanding payments come up to $452,832 over 16 months. 32.W also says that H cannot rely on his unemployment status to support his application as he entered into the Consent Summons in November 2020 at a time when he was not in employment. 33.W says H at least has income from his current employment of $140,000 and rental income of $20,000 of his investment property. 34.She also says H has failed in his duty to give full and frank disclosure of his finances, and that H has continued with his high living expenses while breaching his Order to pay for his daughter. Legal Principles 35.The empowering legislation for variation of maintenance is in Section 11(1) and (7) of the Matrimonial Proceedings and Property Ordinance (Cap 192):
36.The modern approach in dealing with an application for variation of maintenance is summarised by Cheung JA in AEM v VFM [2008] 3 HKLRD 36 at §14, in particular the following sub-paragraphs:
37.The principles are trite in that there should be some change of circumstances since the previous order was made and I am entitled to look at the case de novo. 38.Counsel for W also quoted two more relevant cases which I will refer to below. 39.The Court of Appeal case in G v G [2001] 1 HKLRD 580, where Rogers, V-P confirmed the jurisdiction to vary a consent order for payment of lump sum by instalments; but however in confirming the decision, stated that:
40.And in the Court of Appeal decision of CH v MEH [2012] 1 HKLRD 751, Cheung JA (as he then was) stated that the jurisdiction to vary under these circumstances must be exercised with caution. Further, quoting from paragraph 24:
41.The legal principles, therefore, dictate that I need to find not just a change of circumstance, but one which has changed significantly. Discussion H non-disclosure of his job status 42.After H’s cessation of employment with his former employer in November 2019, H has worked on his own consultant business, but claims to be not making money. He resumed employment status as Chief Business Officer with his current employer F HK Ltd from 17 March 2022; but failed to inform this court and W; it was not until 3 November 2022 when he provides information via his solicitors and only after repeated enquiries from W’s solicitors. He makes a monthly income of $140,000 with F HK Ltd. 43.W maintains that H had many opportunities to inform the Court since March 2022 but has failed to do so. These include:
44.W goes further to say that H has been deliberately dishonest when he says he ceased to receive regular income since losing his job in November 2019, and that he tried to look for a job in 2019, 2020 and 2021 but to no avail. 45.H says that before disclosing his employment via his lawyers on 3 November 2022, he has also informed the SWO on 4 October 2022; this was before he informed the W. 46.H generally blames the fact that he has no legal representation and therefore did not know to disclose this. 47.H says he filed his 10th Affirmation on 15 March 2022 and therefore he was “not wrong in stating that as of the date of the affirmation [he] did not have a regular income since November 2019”, and further support this statement by saying that at that time he has not started his employment nor received any salary from the new job. 48.He maintains that there were no questions about his employment in the questionnaire. Under cross examination, he says, “you did not ask the question, my responsibility is to answer your question.” 49.When asked why he did not withdraw his application on finding employment, he said “I was already in this financial variation, I didn’t know what to do”. 50.H says in court that he began negotiation with F HK Ltd for his employment in February 2022, his employment agreement was dated 10 March 2022. Clearly, leaving this important development in his financial position out of his 10th Affirmation is disingenuous to say the least. Even if he can get away with his explanation for omission in his 10th Affirmation, he has clearly failed to come clean in all the subsequent times mentioned in §43 above. 51.I find that H has deliberately withheld the fact that he has found employment. From the way he responded his cross examination, I am also convinced that he knew it is something he should disclose but chose not to do so. This has clearly shed a very poor light on his overall credibility. Issues to consider
Has there been a change of circumstances? 52.I am looing for material change of circumstances from November 2020 to November 2021. 53.W argues that H was already unemployed when he signed the Consent Summons, so he should not be able rely on his lack of employment as a change of circumstances. I agree. 54.With regard to his consulting business, he said there were shortfalls from estimated revenue in 2021, relying on a table in his Reply Affirmation, which shows his expected income from some deals and the eventual revenue which came in. His supporting documents far from support this position. Not only has he failed to identify the relevant income receipts with regard to the alleged deals, there is hardly any supporting documents for his so called “expected” income. I therefore find this argument far from convincing. 55.H argues that he has increased debts which his income is not sufficient to cover. While he has declared he has liabilities from his credit card with high interest rate financing, and personal instalment loans, he did not mention that he is servicing these loans in Part 4 of his Form E. 56.With regard to two personal instalments loans, in his second Answer dated 1 November 2022, H stated that they were respectively drawn down in March 2018 and June 2020, therefore both loans predate his VOM Application, and even the Consent Summons. 57.Furthermore, while the borrowings are the bases of his application, I do not have any evidence of his previous liability positions, his January 2022 Form E being the only one there is on file. I am therefore unable to accept that this is a “change of circumstances so drastic and unforeseen” to justify a variation of maintenance. 58.The same rationale goes for his credit card liabilities and loans from friends, I do not have evidence if these are pre-existing to his VOM Application. Neither does it appear that he is paying off his credit card liabilities on a regular basis. As for the loans from his friends, they are a relatively minor portion of his alleged liabilities. 59.Nor do I accept the outstanding loans from his mother as change of circumstances leading to the need for variation. I am also of the view that these are but soft loans, and should not be taken into account in looking at H’s overall financial position at this point of time. 60.However, the additional change of circumstance which must be taken into account since the VOM Application is clearly his new employment. This is evidently contrary to the position he takes in his application in that he now has a regular income. 61.Therefore, looking at the bases of his application, I am of the view that there is no material change of circumstances that warrants a revisit of his maintenance for A. H’s VOM application will therefore, not succeed. 62.I can stop here, but for completeness’ sake, I will proceed to look at H’s finances. H’s Ability to Pay 63.Although he claims to have no income when he took out the VOM Application, H’s income by the time of this hearing is $160,000 ($140,000 from F HK Ltd and $20,000 from his investment property in UK). H now argues that despite his new job, he is still unable to pay per the 2020 Consent Order. 64.There is a need to review his expenses, and I am mindful to draw a distinction between expenses versus liabilities when I consider his ability to pay. 65.In his 6th Affirmation dated 3 November 2021 in support of this application, he declared his monthly “liabilities” as follows:
On his own case, his total “liabilities” are therefore $100,148.29. 66.Turning to look at his Form E dated 19 January 2022, his declared expenses under Part 4 then increased to $129,131.17 although covering different items. From this total amount, I shall remove the interim maintenance of $28,302 and school fees of $18,891.67 (which is now covered under the school debenture and will come to an end when A relocates to UK), to calculate his net expenses: $129,131.17 – $28,302 – $18,891.67 = $81,937.5. 67.While there is an overdraft facility in his bank account declared as a liability, this is not a loan which requires servicing on a monthly basis. Nor does he appear to be making regular monthly repayment of his other loans from his mother and friends. 68.H argues in his closing submission that payment for his credit cards should be deducted as expenses, but a quick review of his credit card statements attached to his Form E shows that these are for internet purchases, utilities, restaurant spending, groceries and gas, items which should have been included in his general and personal expenses. Double counting is not acceptable. Even if there are historical outstanding balances, he is not repaying these on a monthly basis so should not be factored into his monthly expenses. 69.What I will therefore factor, are only the two loan repayments amounting to a total of $41,042.99, which are the monthly instalment repayment for his two personal instalment loans, based on the loan statements he produced to his Affirmation and Form E. Making his total expenses $81,937.5 + $41,042.99 = $122,980.49. 70.On the basis of his income of $160,000, he still has a net balance of $37,019.51, which is sufficient to pay for the monthly payment of $28,302 under the Consent Order. 71.In addition, there should be room to economize for items such as $13,500 for food and meals out of home declared in his Form E. H’s further resources His Mother 72.H has produced a note signed by his Mother in March 2022 stating that she loans to him £2,000 per month to support him in his expenses. 73.W’s case also collated various amounts coming into H’s bank accounts from his Mother. This amounts to £63,464 into his Barclays bank account from December 2020 to November 2021; and a further $230,000 into his Standard Chartered bank account in September 2021, which were called “loans” by H in his second Answer. These were not disputed in his reply and I accept these figures. Apparently, H’s Mother is clearly his financial resource, she has the funds, and will continue to support H on both a monthly and ad hoc basis. 2SP 74.H has a property in the UK. This is solely owned by him, there is a mortgage for which he is paying per month, and he receives monthly rental income therefrom at $20,000. In his Form E, he declares the market value of $5,824,344.90 with a mortgage of $3,999162.36, net value by his declaration is $1,825,182.54. 75.W says his estimation is understated, and the closing balance of the outstanding mortgage he produced is from December 2020. All said, there should be a higher amount of equity on this property than he claims. 76.H argues that he does not wish to sell this property as it is preserved for A’s future use. 77.I do not agree with this argument at all. Needless to say, this is his financial resource from which liabilities can be covered and payment be made, he cannot be holding onto a property of this value and then says he has no funds to pay for A. There is an immediate on-going need to look after A’s need today for which he is responsible. At A’s current age of 10, H’s intention to save 2SP for her use should not even be a consideration for at least another 8 or more years. SIC 78.H has declared a gross revenue of $158,180 annually in his Form E. This is not accepted by W and I agree. No financial statements have been provided despite requests were made. And more importantly if this is what he was making prior to his current employment, which is $13,181.66 per month, it is inconceivable how he could be paying for the expenses he claims he has. He can say this is why he has accrued so much liabilities, but it makes no sense for someone to be spending the way he did when he did not have the resources to pay. 79.It is not clear whether H can still operate his consultancy business with his new employment; if he can, he will also have an extra source of income. A’s expenses 80.W argues that if A’s expenses were to be looked at afresh, it still far exceeds the sum that H should be paying for A. 81.H says in his opening submission that as he does not have regular updates from W on A’s activities and expenses, and that it was near impossible to have a fair estimate or understanding of A’s expenses. Yet he argues that A’s expenses are excessive. 82.H says W has been pocketing the maintenance he pays for A, yet he produces no evidence in this regard, and I do not accept his allegations. 83.In his supporting Affirmation, H uses a simplistic approach to make his claim. He calculates A’s expenses as follows:
This adds up to $21,533, and H therefore claims that his $28,302 is 131% of A’s expenses. He then claims that based on this calculation, he should be paying half share of A’s expense which comes to $10,766.50. 84.W says the H’s calculation is misconceived and I have to agree. 85.H has clearly omitted to consider a substantial number of items of expenses, including share of W’s general expenses such as utilities and household expenses; and miscellaneous expenses for A including clothes and shoes, uniforms, school lunches, snacks, external ECAs, medical and dental expense, school trips, holidays, other transport, and A’s therapy treatments. 86.W’s Form E dated 18 January 2022 declared the following expenses:
W has in fact explained that the general expenses is her half share (with her partner T), and therefore E’s share of general expenses should be $38,066 × 2 /3 = $25,377.33. This when added to A’s expenses of $21,201.50, will takes her monthly expenses to $46,578.83. 87.I note that the expenses in W’s Form E look reasonable. H is therefore just paying 60.7% of A’s expenses. And I am mindful that he has not even been paying at all since October 2021, which means W has been bearing the full amount for A since November 2020 except for three months in 2021. 88.Assuming W’s representation is correct, in that there will not be need for school fees for A on her relocation to the UK, H’s payment for A’s maintenance is a more than fair amount. 89.I will also add that I do not accept H’s version of W’s solicitors adding his undertaking to pay school fees into the Consent Summons “without his agreement or notice”. The Consent Summons was made in clear and simple English, and cannot possibly be misunderstood by H. Conclusion 90.I accept the W’s version of event which led to her accepting a lump sum payment for A. She said by the time the Consent Summons was under negotiation, she felt that after the strenuous process and legal costs of the Care and Control proceedings, both she and A needed the finality to the litigation, and she was willing to forego any opportunity to vary A’s maintenance to bring matters to a close. This must have been a well-considered step. The payment was spread out only to the month A reaches age 18, while H’s obligation to pay for A’s school fees is to last until A completes tertiary full-time education. This is the finality she has opted for, and in all fairness, should not be changed lightly or unless there is very good reason to do so. 91.I find that in considering the bases of the H’s application, I do not accept that there has been a material change of circumstances so drastic and unforeseen that warrant a reduction of his maintenance payment for A. 92.Furthermore, looking at H’s income and expenses on a monthly basis, and the financial resources available to him, I find that he has the means to pay. 93.I therefore dismiss the H’s VOM Application, and hold him to his undertakings and to pay for the maintenance for A as set out under the 2020 Consent Order. Costs 94.W has asked for Costs on an indemnity basis. While I have found H to have deliberately failed to disclose his new employment, and still proceeded with his application despite receipt of employment income, he has done so in the absence of legal advice at the relevant time. Giving him the benefit of doubt, I shall refrain from ordering indemnity costs on this occasion. 95.In the circumstances, I make an Order for Costs of these proceedings, including all costs reserved, to be paid by H to W, to be taxed if not agreed, including certificate for counsel. This to be a Cost Order nisi to be made absolute from 14 days hereof.
For Petitioner: Ms. Frances Irving instructed by Messrs Haldanes Respondent: Acting in person | ||||||||||||||||||||||||||||||||||||||||
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