Op-ps v. T (T-h) W
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FCMP 163 / 2020 [2024] HKFC 117 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FAMILY COURT MISCELLANEOUS PROCEEDINGS NO. 163 of 2020 ----------------------------
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--------------------------------- J U D G M E N T --------------------------------- Introduction 1.This trial concerns two variation applications of an Order made in November 2021 (“2021 Order”):
2.F was on and off represented by his lawyers and retains counsel for this hearing, M acts in person. Brief background 3.F is a 47 years old Dutch national and employed by a company that he co-owns which business is in online restaurant marketing platform (“Company”). 4.M is a 49 years old Taiwanese national, she has previously worked at a hotel in Shanghai as an operations manager, and her last job was at the Company. She appears to have experience in sales and marketing, but she claims to be currently unemployed and unable to find employment. 5.F and M met in Shanghai in 2007. They co-habited from 2010 to 2015, they never married. There is one child (“J”) born in April 2013, who was aged 10 at the time of this trial. 6.The parties’ relationship broke down in around October 2015, M and J moved from Shanghai to Taipei. 7.In January 2017, M moved to Hong Kong. She says this is on persuasion by F so that they can co-parent J. They lived together under the same roof until M moved out in June 2020. 8.When M’s move to Hong Kong, F arranged for her to work in the Company, she worked there as a sales director with a monthly salary of $60,000 from early 2017 to the end of 2020. M says that she was then fired from the Company and lost her employment visa which the Company sponsored. 9.After moving out in June 2020, M says F has failed to provide food and living expenses for J until the maintenance decision in November 2021 (“2021 Judgment”); but she says F has breached the interim maintenance Order since January 2022, resulting in her numerous applications for praecipes for Judgment Summons. Procedural history 10.In November 2020, F commenced proceedings to seek joint custody and shared care and control. Following a CDR hearing, the Order dated 12 April 2022 gives the parents joint custody, shared care in terms of half of weekdays and alternate weekends, as well as sharing of school holidays. 11.In February 2021, M applied for interim maintenance for J and carer allowance for herself. 12.In the 2021 Judgment, HH J Melloy noted that M had some limited resources that were available to her initially, and that it was her case that she needed some financial assistance from F, particularly in the short-term pending her obtaining a gainful employment. In light of the above, and on the Judge’s assessment that M has earning capacity:
13.On 30 May 2022, M filed a summons for upward variation of the child maintenance and carer allowance. This is the current Summons before this Court. 14.On 29 June 2022, F filed a summons to vary down the child maintenance. This was subsequently withdrawn by F. 15.On 30 January 2023, F filed a summons for cessation of the child maintenance and the carer allowance. This is also the current Summons before the Court. 16.M has consistently been applying for enforcement of F’s outstanding / delayed maintenance payments, there has been almost monthly application for praecipes for Judgment Summons since December 2022. F’s case 17.The major ground for F’s variation application is that he does not have the financial means to pay the child maintenance because his financial circumstances are now significantly worse than the time when the 2021 Judgment was delivered. He reasons that:
18.F avers that M is the wealthier party, as she owns, albeit with mortgage, a real estate in Shanghai, which he claims to have an estimated value of RMB7.5 million, and should generate at least approximately HK$14,500 rental income per month. 19.F alleges that M is in fact being employed by a company owned by her friend (“S”), supported by cash deposits averaging approximately HK$18,000 per month between September 2021 and January 2023. M was granted an employment visa since 18 August 2021. 20.In his closing submission, F puts forward his open offer:
M’s case 21.M does not accept what F claims. She alleges that the Company was already worth US$10 million back in 2015. During covid, the Company was able to keep all the employees and even hired a new manager. It also expanded business to other countries in Asia. 22.M avers that F has a stock portfolio of HK$3.2 million and investments in cryptocurrencies. F also receives additional income from different sources, such as dividends and bonus from the Company and dividends from the stocks that he invests. She also says he profits from trading in his investment; and that F has hidden bank account or credit card as there were large withdrawals, and she could not trace where the money has moved. 23.M states that F is not running any shortfall, as he is still able to travel frequently and stayed in 5-star hotels; he hires his own body coach, pays for his private piano lessons and substantial legal fees. 24.M says she has not been able to find any employment since December 2020. She maintains that notwithstanding the work visa, she has no job and no income. She says that she has applied for many jobs but all got rejected because she does not speak Cantonese. And she has depleted her savings. 25.M contends that circumstances have changed since the 2021 Judgment, in that J’s expenses has increased with age. She proposes the way forward for the benefit of J that:
Issues 26.Both parties have submitted their own lists of issues. I will summarize the issues as follows:
Applicable law 27.The jurisdiction to vary a maintenance order made under the Guardianship of Minors Ordinance is pursuant to section 10(4) therein, which provides as follows:
28.In the case of AEM v VFM [2008] 3 HKLRD 36, Cheung JA explained the modern approach in dealing with an application for variation of maintenance at para 14 of the judgment, in particularly the following sub-paragraphs:
29.This theme was reiterated in a later Court of Appeal decision on variation, WNWG v PBF [2012] HKCU 675, where the Hon Lam J quoting in part from another important judgment on this issue, HCTT v TYYC [2008] 5 HKC 86, added that:
30.Counsel for the F also referred me to the case of H v S (Financial Provision for Child of Unmarried Parents) [2010] HKFLR 236, paragraph 40 is of relevance:
31.It is also well established that under general principles, both parties have the positive duty to make full and frank disclosure. Discussion Credibility of the witnesses 32.I will start with a brief observation on this topic. This is a case where I find neither of the witnesses credible. This finding comes from the evidence from me, the historical development of this case, and most importantly, their oral evidence and demeanour in court. 33.I am therefore not convinced that F is in the financial position he says he is in; nor do I believe that M is not working. A. Have there been material change of circumstances to justify a variation of the maintenance 34.F relies on his change in financial condition and therefore argues that he is unable to pay for the maintenance. This will be further analysed below. 35.M’s bases for her variation application for increase of J’s maintenance and her own carer allowance are that she continues to fail to find a job, J’s expenses have increased, and inflation. I will make a note here that the M’s application came half a year after the 2021 Judgment, and less than one year after the maintenance hearing in August 2021. 36.It is accepted that a child’s expenses will increase with age, which is why child’s maintenance are always opened to be reviewed on application and evidential support. Often the Court will find that there needs to be a broad-brush assessment of the reasonableness of the claim and exercise the necessary discretion. B. F’s ability to pay F’s position 37.In brief, F says that his income has been reduced, his expenses constantly more his income, and he has to draw from capital. 38.F says that at the time of the 2021 Judgment, he had a salary of $95,000 with allowances. According to F’s updated Form E dated 22 May 2023 (“May 2023 Form E”), he is currently employed by the Company, with monthly remuneration of $91,740, made up of a salary of $60,000, housing allowance of $21,500 and education allowance of $10,240 (which will increase with time). His total expenses stand at $102,895. Thus, there appears to be a shortfall of $11,155 (or $8,000 per his closing submission). 39.Notably, the May 2023 Form E records that in addition to the pensions of $558,691, F has $3,466,470 worth of assets including bank savings, investments, and shareholding in private companies. There are declared liabilities of unpaid debts of $3,380,434, including a loan from his father of EUR249,252 and outstanding student loan and legal fees. Thus, his net assets are $644,727. 40.In the May 2023 Form E, F avers that he has a reduced financial ability to pay, and says:
41.In his oral evidence, F states that in order to make some more income, he is now setting up a consultancy business but as at the date of this hearing, it is not yet in operation and therefore generates no income. He further states that he cannot re-negotiate with his business partners in the Company for a higher income now so he has to shuffle his assets to meet the expenses. 42.F’s current monthly expenses are as follows:
*Including the maintenance order of $23,000 43.F avers that in order to reduce his expenses to mitigate the shortfall, he has sold his car, reduced his rental expenses from $23,000 to $19,000, cancelled J’s summer camp and ECA, and reduced his health insurance from $4,000 to $2,000. 44.F states that his expenses are modest compared to those of M, and that there is minimal room for further reduction. He further states that liquidating his assets to subsidise his expenses is not sustainable. M’s contention 45.However, M disagreed with F and contends that:
46.In his oral evidence, F concedes that from April to December 2022, he was on business trips to Thailand, Vietnam and Indonesia to look for opportunities for the Company, despite the Company was experiencing a cash flow shortage at the time. F says the Company reimbursed him for the expenses incurred. Exhibits R1 – R3 47.During F’s cross-examination, M adduced three charts attempting to analyse the transactions in his bank statements. As these charts prepared by M was lacking in cross references, she was given a chance to produce a version with proper cross references to the court after the hearing. These came in 4 August 2023, whereupon F was given a chance to file a supplemental submission to respond to M’s revised exhibits, this was dated 11 August 2023. 48.R1 deals with F’s financials from July 2021 to April 2022, R2 deals with F’s financials from May 2022 to April 2023, R3 is a table showing F’s income and expenses with comments, where M tries to show that F has more income than declared and more than sufficient to cover his declared expenses and her request for increase maintenance. 49.M says according to her calculation, F’s average monthly income was $549,110 in 2021 to 2022, and $249,626 in 2022 to 2023. Non-Disclosure 50.M allegation of non-disclosure includes the following:
51.In particular, M says F owns a 100% of company (JJ Limited) which he uses as a holding company for 50.6% in the Company; which in turns hold other companies in Asia including Singapore, Vietnam, Indonesia and Thailand. M says some of these Asian businesses should produce franchise fee which the F has not disclosed. She also says there were no details of these underlying companies as H has not produced any information or account. 52.With regard to the companies, M claims that she has conducted a revenue calculation based on F’s statement that the Company hold stakes in the Asian companies, and came to the conclusion that F should have an income of $15,230,000 based on his 50.6% ownership. She then submits valuation of some of the underlying companies based on a website for “valuing e-commerce business” and concludes that the F is worth between $43-64 Million. She also gives estimates of the revenue of an underlying Singapore company based on the HK company’s revenue. Analysis 53.M’s analysis of the numbers and production of the detailed charts are commendable, but her concepts are wrong and misconceived. 54.F says the charts looks different to the ones produced in Court. On a quick perusal, some numbers are different, but the major additions were the cross references. These charts appear to be an attempt at some forensic accounting of the F’s bank statements. F comments that some of these are incorrect, which I agree:
55.Her charts cannot be relied on to support her case that F has substantial and/or regular income in the amount she says he has. 56.Furthermore, with regard to the companies with which F has connection, he did produce audited reports for JJ Limited, the Company, and S & B Limited; on which M relies to do her assessment of revenue and value. But her valuation of companies, and assessment of companies’ revenues have no sound basis; it was not done by a proper professional and gave no chance for H’s counsel to challenge. Her assessments are therefore not accepted. F also denied the existence of certain companies and also says that M has mistook a brand name for a company name. In this regard, I am of the view that M has not come up to proof in terms of these companies’ revenue, valuation and profits, and how these translate into any additional income for F. 57.That said, R1 and R2 do show that he trades extensively; and it also shows that he has other financial resources in the form of trading profits and investments income which he has failed to disclose. Looking at the two Forms Es produced at this hearing, he has only declared his work income in his two Form Es. As for “other income” in section 3.6, in his August 2022 Form E, he says that dividend and small interests’ payments will not be counted as income as he has reinvested them but made losses in his investments; and in the May 2023 Form E, he puts “nil”. 58.I have also perused the F’s bank statements and related exhibits and will make the following observations:
59.I am not of the view that F has come up to proof that he is constantly making losses in his investments, and that he has no investment income from his stock portfolio. I also accept M’s argument that money has left his bank account on a number of occasions which were unexplained. 60.In the light of the above, on a balance of probabilities and a broad-brush basis, I shall draw adverse inferences against F, in that he has more financial resources than he claims. 61.I will add here that, despite the fact that M is acting in person and has displayed a commendable ability to present her case with a lot of details; she appears, however, to be unaware that documents attached to her list of issues, her submissions, or her frequent correspondences to the Court are not evidence, and will not be treated as such unless contain in her affidavits and exhibits filed with the Court. F’s payment of maintenance 62.It is of note that M in her correspondences, notes and submissions often questions F’s ability to pay on time when maintenance was due and there was money in his account. This is not incorrect. It is also worth mentioning here this has resulted in continuous and almost monthly applications by M for enforcement proceedings. 63.One really needs to look at the way F made payment to M to understand why M took out numerous praecipes for enforcement. The following came from one of F’s affidavit exhibit where he extracts numbers from M’s bank statements to calculate money going into her account between December 2021 and January 2023; and what I found in some subsequent bank statements.
64.Pursuant to the November 2021 Judgment, payment was ordered to be made on the 1st of each month. The pattern is obvious in that F’s payment is almost always delayed, so M can never get the maintenance support she needs for J at the time that is expected in compliance with the November 2021 Court order. F has on his own accord decided that he could pay as and when and how much he pleases, somehow payments would catch up but never at the court ordered time. 65.This is nothing short of financial harassment, regardless of what F thinks of M’s possibility of employment, or that she should be making some sort of income, this is not the way to comply with a court order. This explains also why the Court receives almost monthly application for praecipe from M, resulting in wastage of time and costs on M’s part and of the Court. Looking at F’s bank statements, it is not like he does not know how to set up standing instruction for payments. Furthermore, at all times, he has a healthy balance in his savings account and in his investment portfolio, it is beyond reason that he has continuous failed to make his maintenance payment on the 1st of each month. So clearly, this is deliberate conduct on his part; and could have adversely impacted J. C. M’s employment, earning capacity and financial status M’s financial position 66.According to M’s Form E dated 22 May 2023, she is currently unemployed and therefore has no income. 67.Notably, the said Form E records that in addition to the pension of $36,997, M has $2,608,484 worth of assets including bank savings and investments of $252,538; and a property in Shanghai which she valued at $2,800,000 and subject to a mortgage of $447,437 (as at May 2023); and for which she pays RMB5,387 monthly for mortgage and management fees. There are declared liabilities including outstanding credit card payments of $9,523, and a loan from a friend of $1,130,000. Thus, she has net assets of $1,505,958. 68.M relies on the 2021 Judgment to say that the Shanghai property was difficult to sell. F says this is no longer the case, as the covid crisis in China is now over, the Shanghai property is an asset which puts M in a financially stronger position than F. F contends that the value of the Shanghai property is worth more than $2.8M; relying on a realtor’s website, he says that the property should be between $5.8 - $9.2M, and hence an average of $7.5M. Furthermore, F says this property could rent for as high as RMB29,000 per month, which is much more than the RMB7,500 that M’s tenant is now paying. Employment 69.As mentioned above, M claims she is unable to find employment since December 2020 despite her attempts. She says this is due to her inability to speak Cantonese. 70.F alleges that M’s employment visa was renewed on 18 August 2021 and was permitted to remain in Hong Kong until 16 November 2024. In her oral evidence, M admits that she has signed an employment contract with a company owned by her friend S. She says that she cannot provide the employment contract because S has not given a copy to her. 71.F further alleges that M receives a monthly salary of approximately $18,000 for her employment with S or her company. F tracked payment into W’s bank account over the period from September 2021 and January 2023, and points out that she deposited cash averaging $18,000 each month. 72.In her oral evidence, M maintains that the deposits at issue were not salary payments but loans from S. However, she cannot provide any signed loan agreement nor recall how she signed it. M’s expenses 73.Per her May 2023 Form E, she claims her monthly expenses to be a $72,590. F contends that her net position in her HSBC statements from August 2021 to January 2023 shows that she did not need to dip into her savings and has maintained a steady $230,000 across the period. She has credit card debts, usually under $10,000 which was paid off every month. 74.F has also tracked her expenses and says she spends an average of $31,000 per month; he says that M has failed to explain the discrepancy between this amount from her claimed expenses when asked under cross examination. Analysis 75.M admits that she has an employment visa, this was since August 2021, and before the 2021 Judgment. This issue did not come up in the 2021 Judgment. Looking at the date of the hearing of 3 August 2021, against the date of issuance of M’s employment visa on 18 August 2021, it is not clear whether the topic of M having applied for an employment visa around that time was explored on not. Regardless, as the application for the employment visa must be supported by an employment contract, F says that M has misled the Court in her letters in October 2021 wherein she confirmed that she was still unemployed. 76.M only disclosed tax assessment for 2020-2021, but did not disclose her tax assessments from 2021-2023, but instead chose to provide a letter from the Inland Revenue Department to try to prove that she does not have a job and have no income. However, the letter dated 9 February 2023 only shows that she does not have any unpaid tax. This could not be relied on to prove that she has no job and no income. 77.F’s closing submission also reminds me that M was given two opportunities to deny that she was employed. On both occasions, I agree that her answers were evasive, she in fact never said that she is not working. 78.I do not find it believable when M says she signed an employment contract but did not have a copy. Nor do I accept M’s version of event that despite the employment visa and the alleged existence of an employment contract, that she is not working. 79.According to F’s analysis, M has at least an average income of $18,000 cash deposit, I do not accept that this is loan from S. There is no proof as to the existence of any alleged loan from S. Furthermore, it is incredulous that her loan of $700,000 in her November 2022 affidavit was increased to $1.13M by May 2023 (per M’s May 2023 Form E). This represents a further loan of $430,000 over 7 months, averaging $61,428 per month. There does not appear to be in evidence how this amount of loan went into the M’s bank balances over this 7 months’ period. 80.From all the evidence before me, I make a finding that M is currently working and is making at least $18,000 per month. 81.M has confirmed that she has completed a master’s degree in Global Digital Marketing, and under cross examination acknowledged that it will increase her earning capacity. Given her previous income when employed by the Company, and this additional qualification, I will adopt HHJ Melloy’s finding in the 2021 Judgment that M has an earning capacity of $50,000. 82.With regard to the Shanghai property, I accept F’s argument that M is under-utilizing this asset. F argues that the rental income should be higher; if I were to adopt the F’s proposal of a more average income of RMB14,500 and taking into account her claim to pay mortgage and management fees, she could at least be netting RMB9,000 per month. This was not contested by M, and I do not accept her reliance on the 2021 Judgment position which was based on the covid situation in Shanghai back in 2021. This clearly implies that M can make more income from this property; and if need be, she can sell this property to improve her financial condition. J’s Needs 83.Given J is a pre-teenager and her needs will gradually increase during adolescence and after, I consider it fair and reasonable to assume that J’s expenses will only go up over time. 84.M’s current monthly expenses are as follows:
85.The following table shows the M’s position on two occasions and the Court’s assessment:
86.Based on the numbers from M’s opening submission, she asks for $30,248 for J, being ½ of the general expenses of $23,496, that is $11,748 + $18,500. 87.In assessing the needs for J, I have taken into account the following factors:
88.J’s share of general expenses shall be 50% of $23,600, hence $12,000 (rounded up), the proportion to be shared between the parents are: F is to pay $8,000 and M to pay $4,000. 89.As for J’s expenses, which by my assessment is $12,900; I will apply the same proportion above: F is to pay $8,600 and M to pay $4,300. 90.On this calculation, F is to pay for $16,600 further to his undertakings. In assessing this amount, I am mindful that the 2021 Judgment has expected F to pay $13,000 for J after M has found employment. This upward adjustment is not an unreasonable amount in the light of J’s increasing needs. 91.In reviewing this against the respective parent’s ability to pay. I look at F’s declared expenses (paragraph 42 herein refers), from which I deduct his rent, school fees and medical insurance for J which are items paid for by the Company, and the interim maintenance order of $23,000. This is without challenging the reasonableness of his numbers.
Adding the above assessed amount to this: $47,155 + $16,600 = $63,755. Taking into regard F’s declared income of $60,000, and even without my assessment of his financial resources, he can pay this amount with some economizing on his part. I am of the view that F has the ability to pay this amount base on his income and the adverse inference I have drawn. 92.As for M, I have adopted the earning capacity of $50,000. Without challenging the reasonableness of her personal expenses, M pays as follows:
The total rounds up to $48,094 and is an amount M can afford based on my assessment of her earning capacity, also taking into regard better utilization of her Shanghai property. M’s Carer allowance 93.M asks for an increase from $5,000 to $9,500, and to increase 10% annually for inflation. She says that this carer allowance will only stop once her salary is above $48,001. 94.I am of the view that M is no longer entitled to a carer allowance. J is now 10 years old, M has a full time domestic helper. I have made a finding that she is in employment, and probably has been for some time, which appears to be working for her in this shared care scenario. I have also made a finding that she has failed to maximize the utility of the Shanghai property, this to be in the form of more net income or a capital asset which she can liquidate and bring to Hong Kong. By all accounts, the carer allowance shall cease. Backdating 95.In F’s closing submission, he argues that there should be backdating to 19 February 2022, which is three months after the 2021 Judgment, claiming that this is the automatic expiration under section 13(3) of the GMO. HHJ Melloy in the 2021 Judgment, made reference to the judgment of LCTP v TKKP FCMP 173 of 2009 with regard to the duration of interim orders under the GMO, she then made it clear as follows:
96.F has appeared on a number of occasions in court before me, and been repeatedly told that the maintenance order made in the 2021 continues to run until further Order. I therefore do not accept his counsel’s backdating argument on the basis of a statutory limitation of the interim order. 97.He also said that this is in “just recognition of the fact that M has been enjoying her increased financial resources since at least then, has been working since then, lied or misrepresented her circumstance to the Court, and … failed to comply with the direction to inform the court of her employment.” This argument seems to suggest that backdating is for punitive reasons, which cannot be correct. I do not accept these are the bases for backdating maintenance payment either. 98.Although I have found that M is actually working, and likely to have at least an average of $18,000 income per month (albeit fluctuating); there is no evidence before me that she is currently making more than that. 99.However, It is important for M to be in funds in J’s best interest. I am of the view that F should contribute the previously ordered amount until May 2024. Hence the previous Order made of $18,000 for J should continue until May 2024. 100.The new Order for J’s maintenance shall run from June 2024. 101.As for the carer allowance, on the basis that M’s income should be applied towards her own expenses, and taking into account that it appears to be fluctuating payment, I shall allow backdating to the date of hearing in June 2023, hence the carer allowance of $5,000 is to cease from July 2023. It is therefore expected that if payments have been made for carer allowance to M, that adjustments will have to be made. 102.It is imperative that M should take the necessary actions to ensure that her expenses for herself and her share of J’s expenses shall be covered going forward. 103.The Order to be made herein shall be treated as a maintenance order despite both parties applied for variation of interim maintenance in their respective Summons. This matter has been fully argued and considered, and it is intended that the order to be made shall be a longer-term maintenance order for the child, and not one of an interim nature. Costs 104.Neither party has given me a proposal that is close to my final Order. F started off his Summons with his application to cease all payments to M other than his undertaking, and only on his closing submission proposed to pay $10,500 in addition to his undertakings. M asks for $30,248 in addition to F’s undertakings. 105.I have decided to make no Order as to Costs. 106.In making this Order, I have taken into account F’s conduct with regard to his maintenance payments; and M’s conduct with regard to her employment status. Order 107.I shall make the following Orders upon the continual undertaking by F to pay for J’s school fees and medical insurance.
Applicant represented by Mr Josh Baker instructed by Messrs Tanner De Witt Respondent acting in person | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment