Aa v. Wsc
Read the full judgment text of FCMC 3096/2020 on BabelCite. This Family Court judgment was delivered on 30 August 2023 before His Honour Judge S. Lo.
Matrimonial Causes – Variation of interim maintenance – Material non-disclosure – Full and frank disclosure – Ability to pay – Club expenses – Costs – Petitioner sought to vary interim maintenance order due to Father's non-disclosure of employment and income increase – Court found Father breached duty of disclosure – Court varied maintenance to HK$132,150/month from 1 July 2022 – Father ordered to pay 2/3 of Petitioner's costs on party and party basis
Legal issues: Variation of interim maintenance order · Father's ability to pay and apportionment of expenses · Club expenses deduction · Costs order
Outcome: Variation of interim maintenance order granted; maintenance increased to HK$132,150/month from 1 July 2022; costs order made.
Cited by 1 case · Cites 4 cases
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FCMC 3096/2020 [2023] HKFC 170 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 3096 OF 2020 ----------------------------
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------------------------------------ JUDGMENT ------------------------------------ Introduction 1.On 3 February 2021, I made an interim monthly maintenance order for the three daughters of the family (“Children”) against the Respondent (“Father”) in the total sum of HK$34,200 (ie $11,400 per child) with the Father’s following undertakings:
2.This is the application of the Mother by way of her summons dated 21 June 2021 seeking to vary the 2021 Order. 3.The Mother asks the Court to substitute paragraph 1 of the 2021 Order (ie interim monthly maintenance of HK$34,200) with an order for maintenance of HK$141,800/month (or ~HK$47,266 per child) an increase of HK$107,600, and also to require that the Father not deduct the reasonable expenditure of the family at the clubs from maintenance (in addition to his existing undertakings to pay for school fees and part of the Children’s ECAs and extra tuition). 4.On 24 November 2022, I ordered that this application be disposed of on paper with other directions for filing of the bundle and submissions etc. Background 5.The Mother is now aged 46 and usually works from home on Mondays and Fridays in an international IT company since 2016. 6.The Father is now aged 50 and commenced employment with a famous bank as the managing director of a department in February 2021. Both of the parties were graduated in the very prestigious universities in the USA. 7.They married on 3 July 2004 in Hawaii, the USA and have the Children, namely:
8.Decree Nisi was pronounced on 3 May 2023. 9.According to the Order dated 3 February 2021, I granted joint custody. Further to my Order dated 12 July 2023[1] after a 3-day trial, the Mother was granted sole care and control of the Children with defined access to the Father. 10.It is noteworthy that the Father disclosed during the children’s trial that he has a second family and another son (“Young Son”) who is aged about 4 moved from PRC and currently living with his mother (“Madam Li”) in Hong Kong, and he spends roughly half of his time living with them at Burnside in Repulse Bay. Mother’s case 11.Mr Robin Egerton and Mr Azan Marwah for the Mother submitted that this application was prompted by two significant changes of circumstance. The first change being her discovery that the Father had misled the Court at the time of the 2021 Order that he was “unemployed” with “no income”. He hid from the Court and the Mother that he had been offered employment by his present bank employer on 30 June 2020, and that he had already signed the contract on 22 January 2021. Under that contract, he received HK$1,185,869.10/month in total income in 2022. This is roughly 4.4 times the Mother’s income and almost 13 times greater than what he reported to the Court at the time of the 2021 Order. The original application determined by me on 3 February 2021 was based on the Mother’s compromised claim, which she would not have done but for the Father’s deception. Due to the deception, she only sought the Father to pay half of the Children’s needs at that time. 12.The second change is the increase in the Children’s expenses related to their growing age and the end of Covid. 13.Prior to the filing of the Petition, the Father was responsible for all of the Children’s expenses. The amount now sought by the Mother for the Children (i.e. HK$141,800) is roughly the same amount that the Father pays for Madam Li and the Young Son’s rent (i.e. HK$140,000) as disclosed by him in his updated Form E. Accordingly, it is reasonable for him to increase his contribution to the Children’s needs to reflect their new needs and his considerably higher income. Father’s case 14.The Father argued that the Mother’s claim in respect of his income is misconceived, in particular his huge US tax liability and the discretionary stock awards of US$316,691 by his bank employer, and that the Mother’s and the Children’s monthly expenses are exaggerated. In short, he contended no material change of circumstances. Standard of living before separation 15.Prior to separation, I consider that the family and the Children enjoyed a very high standard of living based on the facts as follows:
Law on Children’s Interim Maintenance 16.Interim maintenance for the benefit of the Children is based on section 5 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”) which provide that the Court shall make such order as it considers “reasonable”. 17.It is trite that in determining an application for the Children’s interim maintenance, the overriding considerations are the immediate and reasonable needs of the Children and the Court has to balance their reasonable needs and the ability to pay of the payer on an interim basis. 18.In undertaking this balancing exercise, the Court will adopt a broad-brush approach, without a detailed investigation of the financial positions of the parties which will be examined at a later date at a full ancillary relief hearing if agreement cannot be reached in the meantime. 19.The principles to be applied to applications for maintenance pending suit or interim maintenance are as follows:
20.It is also well established that in ancillary relief proceedings, which include applications for maintenance pending suit, there is a duty on both parties to make full and frank disclosure of the relevant materials to enable the Court to exercise its discretion to make the order, and if it is of the view that the evidence disclosed by a party is deficient, adverse inferences may be drawn against that party. 21.Applications for the variation of a child maintenance order are made pursuant to section 11 of MPPO, which requires:
22.In Siu Wai Ming v Shiu Wai Hong [2021] HKFC 185 at §31, HHJ Melloy summarised the law: in considering a change of circumstances, the court should look at the case de novo. In other words, the court is not necessarily bound by the existence of a previous order. It will be necessary to look at the situation afresh and make an order based on the parties’ existing financial circumstances. The modern approach is that the court has to consider all the circumstances of the case, and the court is not hide-bound by the existence of a previous order; the court must look at the case de novo and make an order that is reasonable in the current circumstances. The usual basis on which a variation of an order for periodical payments is founded is that there has been a material change in the circumstances of one or both the parties. On application for revision, the court has ‘regard to all the circumstances of the case’ in the same manner as if those circumstances had existed at the date of the original order. There would normally be a reason for the application to vary (i.e. a “trigger”). 23.It is also trite that in any financial application before the Family Court, including an application to vary maintenance, there is a positive duty on both parties to make full and frank disclosure of their means. This duty is well known to all family practitioners (and certainly to those instructed by H at the time of this 2021 Order). The law was helpfully summarised by HHJ Melloy in the recent case of ST v MFP [2022] HKFC 168:
Discussion Father’s material non-disclosure 24.Prior to the hearing presided by me on 3 February 2021, the Father represented that he was unemployed (per his Form E of 27 July 2020 §1.4.1) with “no income”. On this basis, the Mother compromised her claim for interim maintenance (from $228,700 to $108,527 per month). According to the 2021 Order, the maximum amount payable by the Father is $51,700 per month excluding direct payment of school fees of the Children by him. 25.The Father signed an agreement with his present bank employer on 22 January 2021 (just two weeks before the hearing on 3 February 2021), despite being personally present with his solicitors and Counsel at the hearing on 3 February 2021. His first Form E dated 27 July 2020 did not mention that he had been offered employment by his present bank employer on 30 June 2020. 26.The Mother only came to know about the Father’s new position after the hearing on 3 February 2021. On around 10 March 2021, the Mother’s lawyers saw details of the Father’s employment in a press announcement that he had been hired by his present bank employer, as one of their senior bankers. However, when the Mother’s lawyers wrote to the then Father’s lawyers, he still refused to provide full and accurate information about his work and his remuneration. 27.According to the Father’s most recently Form E, his total compensation including bonus is indeed just over HK$8.54 million (in excess of HK$712,000/month) plus additional allowances (which he has still not disclosed). According to his 2022 US Tax Return, his annual income in 2022 was US$1,824,414 (~HK$14,230,429) or roughly HK$1,185,869/month. 28.I accept the Mother’s submission that the Father’s non-disclosure is highly relevant and significant to this variation application. He chose to withhold this important information from the Court at the hearing on 3 February 2021. Consequently, the Mother compromised her claim. 29.His only justification for his failure to disclose his new employment, the negotiations, his expected income and allowances is that these matters were confidential, and he was forbidden from disclosing to “third parties”. Nonetheless, he has provided no documentary evidence of any such non-disclosure agreement. In my view, he must have been advised by his then experienced and specialist Counsel and solicitors that his overriding legal duty was to the Family Court to make full and frank disclosure and that the Mother would have been subject to her own implied undertaking not to disclose to third parties[2]. 30.I therefore reject the Father’s argument for non-disclosure due to the confidentiality of documents, as parties are under an implied undertaking not to use them for any ulterior purpose. 31.In spite of his first Form E filed in July 2020, the Father must have the duty to inform the Court of his new employment via his then lawyers at the said hearing on 3 February 2021. I have no doubt to conclude that he has been in breach of his continuing duty to the Court to make full and frank disclosure of all material facts. In the circumstances, it is then open to the Court to draw a reasonable adverse inference as to his financial resources and ability to pay. Increase in the Children’s expenses 32.The Mother has reported an aggregate increase of about $82,000 in her monthly expenses in the light of the Children’s growing up and the end of Covid-19 pandemic. 33.For instance, the Mother said that the Children are now participating in summer activities/camps (HK$12,830), the 2 elder daughters’ swimming competitions (HK$5,000), and overseas holidays (HK$15,000), all of which were not possible at the 2021 Order due to Covid-19. However, I consider that some of these expenses are not regularly incurred on monthly basis. 34.As the Court will only adopt a broad-brush approach without a detailed investigation, I am of the view that for interim purpose, the Mother’s and the Children’s expenses will not be examined item by item. As the 2021 Order was made more than 2 years and 6 months ago, I generally accept that their expenses would have been increased after the end of Covid-19, which are now assessed as follows:
35.According to the latest Form E of the Mother, her monthly earning is about $270,000. In my view, since she is seeking interim maintenance for the Children only but not MPS for herself, she has to solely bear her own personal expenses of HK$93,400 or even the higher amount she claimed. For the general expenses of $132,135, I consider that she shall bear ¼[4] thereof being her share for the general expenses. For the remaining ¾ of the general expenses in the sum of $99,101 (ie ¾ × $132,135) and the Children’s expenses (ie $77,100) in the total sum of $176,201 (ie $99,101 + $77,100), it shall be shared by the parties. As they have different monthly earnings, they shall not share equally. However, before I deal with the issue of sharing or apportionment, I have to discuss the Father’s ability to pay first. Father’s ability to pay 36.The Mother said that the Father is a wealthy man with a very high income earning HK$10 million per year, prior to the breakdown of the marriage. In his Updated Form E, his assets exceed HK$58 million (including HK$25m in cash at bank). He is now paying HK$140,000 for the Young Son’s rent alone (excluding general and child related expenses). 37.To start with, I reject the Father’s submission that he is required to maintain 2 households. I have no knowledge about the finance, earning capacity and actual income of Madam Li. As the Father fails to disclose Madam Li’s financial situation, I disagree that he has to bear all the expenses of the Young Son and Madam Li. In the circumstances, his expenses claimed in his Form E which may covered the expenses of the Young Son and Madam Li will not be allowed. 38.The Father only accepted that he has the average monthly income of about HK$718,000 and further as a US citizen, he is liable to pay very substantial US Tax. For the purpose of this application, I will take into account of his employer’s discretionary stock awards, which must form part of his annual income, even though it is not a regular payment. 39.Regarding the US Tax payable by the Father, he stated “To be confirmed” in his latest Form E dated 15 May 2023. Subsequently on 18 May 2023, he suddenly produced the US Tax Return (a bundle of tax documents consisting of about 70 pages) to the Mother’s solicitors by email and he now said in his written submission that his annual tax payment is US$605,446 (or HK$4,710,370). I doubt very much as to why he could not state the exact amount of tax in his Form E (which he has to affirm) but chose to produce the tax documents by email after about 3 days later (which he does not have to affirm). It is entirely undesirable and unreasonable for him to do like this. 40.Where the disclosure by the Father is obviously deficient, I do not hesitate to make robust assumptions about his ability to pay. The court is not confined to his mere say-so as to the extent of his income or resources. In such a situation, the court should err in favour of the Mother. In other words, I conclude that the Father has ability to pay. In any event, he has assets exceeding HK$58 million according to his updated Form E. 41.I would further say that since the issue of the Father’s tax liability in US and HK may be complicated and disputed by the Mother, if the FDR hearing or trial of the ancillary relief proceedings is to be set down, the parties may have to consider to file a report by a single joint expert for the issue of the Father’s tax liability, if necessary. Apportionment of the Children’s expenses 42.As the Father has the income at least 3 times of the Mother even excluding the discretionary stock awards, I roughly apportion that the Father shall pay $132,150 (ie about ¾ of $176,201) based on broad-brush approach. Such monthly payment be made by the Father on the basis that he does not have to reimburse the Mother 50% of the Children’s ECA expenses and the Children’s extra tuition expenses but still have to pay the Children’s school fees direct as undertaken in 2021 Order. Club expenses 43.There is no dispute that the Children incur club expenses, and that the Father should pay these expenses. He has all along represented through submissions of counsel[5] that he would continue to pay club expenses, which was accepted by me at the hearing on 3 February 2021. 44.The Mother said that the Father has, however, deducted these payments from the Children maintenance payments unilaterally. 45.His only complaint is that the Mother might use her access to the club for her own purposes without the Children. The Mother is willing to give an undertaking to the Court to reimburse the Father for any club expenses she incurs for her sole benefit. If the Mother incurs for the benefits of the Children or any one or two of them, and herself, she should try to apportion the expenses reasonably and pay back the Father her share. I trust the Mother will honour such an undertaking by reimbursing the Father these expenses. In case, the Father has evidence to show the Mother’s breach of the undertaking, he may consider making an application to the Court, if necessary. 46.In view of that undertaking, I accept that there is simply no basis for the Father to unilaterally deduct expenses from his maintenance obligations. In other words, he shall not make deductions from the payment of maintenance under the 2021 Order and this Order for any reasonable expenditure by the Children at the Hong Kong Country Club and Hong Kong Jockey Club. The Mother invited me to give a declaration so that the matter is clear for the future. However, for the purpose of making an interim maintenance order for the Children, I do not think that I shall make such a declaration as sought. But I will accept the undertaking given by the Mother as said above. If the Father insists to make such unilaterally deduction, the Mother may take out necessary application to enforce the 2021 Order and this Order. Back-dated payment 47.The Mother took out her variation summons on 21 June 2021 and asked for the new interim maintenance of the Children be back-dated in May 2021. The Father opposes as the Covid-19 restrictions were removed in the first quarter of 2023. 48.I accept that some of the Children’s expenses increased only after the end of Covid-19. However, the main reason for my decision to vary the 2021 Order is the Father’s material non-disclosure or his commencement of employment in February 2021. Besides, another reason why the application which I ordered to be disposed of on paper, is determined only about 2 years later, is largely due to the delay of the Father’s filing of his updated Form in May 2023, which I think that he can do it much earlier. Having considered all the relevant circumstances, I exercise my discretion to order back-dated payment from 1 July 2022. Order 49.In the circumstances, I make an order as follows:
Costs 50.As to the question of costs, the Mother asks the Father to pay costs on an indemnity basis: L v C [2007] 3 HKLRD 819 at §§67 to 70. 51.I accept her submission that the Father is in breach of his duty to make full, frank and clear disclosure, which should be “correct, complete and up-to-date”. However, I do not think that she entirely succeeds in this variation application. I now exercise my discretion to make an order nisi that the Respondent shall forthwith pay the Petitioner 2/3 of her costs of this application on party and party basis with certificate for one Counsel including all costs reserved in relation thereto, which shall become absolute unless any of the parties apply for variation with supporting affirmation by summons within 14 days. 52.Such costs be summarily assessed on paper with the following directions:
Mr Robin Egerton and Mr Azan Marwah instructed by Tanner De Witt for the Petitioner The Respondent unrepresented appearing in person [1] See my Judgment dated 12 July 2023 [2023] HKFC 129 [2] see B v B [1978] Fam 181 at 192H-193A [3] 50% (ie $17,500) is currently paid by the Father per his undertaking in the 2021 Order. [4] 4 members living under the same household consist of the Mother and the Children excluding the domestic helper [5] see the Father’s Counsel 2021 Submissions §18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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