Judith Miriam Clarke v. Lindsay Clarke

FCMC000433/1980

Courts power to deal with applications to vary current order where a lump sum payments is to be made by instalments. ,

Different statutory considerations than as pertained in De Lasala v. De Lasala.

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

DIVORCE JURISDICTION

ACTION NO. 433 OF 1980

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BETWEEN

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Date: 9 March 1983

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JUDGMENT

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1. An order was made by Mr. Registrar Wilson on the 3rd of December 1981 whereby the Respondent was ordered to pay to the Petitioner a lump sum of £28,000 to be paid as follows:-

2. The order further provided that the Respondent paid to the Petitioner periodical payments on a varying basis. Pursuant to the order the amount with which I am now concerned is $9,000 per month, $6,000 to the Petitioner and $1500 per month to each of the two children of the marriage.

3. The order commenced with various recitals including an undertaking by the Petitioner to consent to an order for the vesting of the custody of the two children jointly in the Petitioner and Respondent with care and control to the Petitioner.

4. It appears from the proceedings before me that in fact the order made by Mr. Registrar Wilson in relation to the sum of £28,000 was entirely by consent although such a recital is not made in the body of the order.

5. Is it worth further mentioning that the Respondent had. also been ordered to pay the Petitioner's costs with a provision these be paid by twelve equal monthly instalments beginning on the 31st day of March 1982, with disbursements to be paid on or before the 31st day of January 1982.

6. The matter comes before me by way of a judgment summons hearing brought by the Petitioner in respect of the Respondent's failure to pay the second instalment of £18,000, ordered to be paid on or before the 31st day of July last, and also upon the Respondent's application to vary the order by discharging the Respondent's obligation to pay to the petitioner the said sum of £18,000.

7. Affidavits have been filed by both the Petitioner and the Respondent and the Respondent gave oral evidence before me.

8. The facts appear clear. May I say at the outset I am convinced that Captain Clarke at the time of consenting to the order, after advice from solicitor and the Counsel, was an honourable man who tried to "put his house in order" despite previous differences for which he mayor may not be responsible ,and that subsequently due to matters beyond the picture shown in his personal "crystal ball" found himself unable to meet the balance of the capital sum to be paid, that is £18,000.

9. He borrowed  £10,000 (approximate) to meet his initial instalment this from The Hong Kong and Shanghai Banking Corporation, as a bridging loan, pending the anticipated sale of his interest in a house property at Port Grimaud, France.

10. At the time of the order Mr. Gilbert Rodway of Counsel prepared, in his own hand, a schedule of the assets of both parties, showing that if the one third rule were followed, then the Petitioner would be entitled to a sum of approximately £12,000.

11. At that time it was believed by Mr. Rodway upon instructions that Respondent's equity in the Port Grimaud property was about $305,000.

12. There are three other matters worth mentioning as far as Respondent's assets are concerned. There is property in Canada with an equity of some $14,000 and to all intents and purposes, this property was disregarded by Mr. Hemens on behalf of the Petitioner, when cross-examining Respondent. I also propose to disregard this.

13. Included in Respondent's assets at the time of the order was furniture stored in the United Kingdom owned by him to the value of $85,600. I shall have more to say of this later.

14. The major asset owned by Respondent was his interest in a provident fund organised by his employer Cathay Pacific Airways and at the time of the order this was worth approximately $177,730. When giving evidence before me, Respondent indicated that his estimate of his present interest would be some $230,000.

15. His evidence before me which I accept is that the provident fund monies are not now available as collateral security for borrowing from any bank in Hong Kong.

16. I also accept that banks in Hong Kong do not look favourably upon assets offered as collateral security by private individuals, when such assets are outside the jurisdiction.

17. May I also state that I accept the evidence of the Respondent that he has endeavoured to sell the Port Grimaud property but without success and that there has been a considerable dimunition in the value of his equity.

18. The Petitioner is in partnership with a colleague, a Mr. MaCathy in the Port Grimaud property and it is obvious that the sale of a half interest presents more than usual difficulty even if market conditions were buoyant.

19. An exhibit was attached to Respondent's affidavit LC 7 which consisted of a report from BBR International S.A. Financial Advisors - Respondent's current cash flow is shown having a deficit of ($2,000) per month.

20. There has been produced Exhibit PR 4 relating to Respondent's debt servicing, which shows that instead of $9,000 as appears. in the Financial Advisors' report, the figure to-date has been $10,400 but a loan has been extinguished in January of 1983, leaving $1,400 no longer payable, leaving the new total of $9,000.

21. It is also worth mentioning that a figure of $900 is included in debt servicing being payable to the Petitioner. This represents Respondent's way of assessing "compensation" for having failed to pay the £18,000 due on the 31st of July last.

22. It is also worth noting that included in his figure of $9,000 per month is the payment to Hampton, Winter & Glynn, Solicitors for the Petitioner of $3,800 per month for her costs there being one more payment due at the time of hearing.

23. The Respondent gave evidence, which I accept that upon this particular debt being extinguished he then has to pay his own solicitors, they having obviously being somewhat tolerant in collection of their costs. He proposes to pay these costs at the rate of $5,000 per month, and estimate, some 14 months will be required to extinguish this liability.

24. In respect of the loan of £10,000 raised to provide the first payment to his wife as ordered by Mr. Registrar Wilson, the Respondent has been making repayments of $2,900 per month with interest of $1,400 a total of $4,300.

25. The original loan accounts which stood at $1,117,520 with Hong Kong and Shanghai Banking Corporation is shown in the statement dated the 11th of January as being now $90,500.

26. I am in no doubt that the Respondent when faced with substantial financial problems to the extent that he was verging towards the point of insolvency, has made and is still making an honest endeavour to meet his obligations, and it is worth reciting that. the total payments that he makes at present due to the break-down in his marriage are as follows:-

27. In addition the Respondent pays $6,000 per month in respect of the mortgage of his interest in the French property which he intended to sell and liquidate this liability, so as to provide his wife with the further £18,000 required pursuant to the court's order.

THE LAW

28. In Minton v. Minton [1979] A .C. 593 The House of Lords enunciated the 'clean break' principle. There can be no doubt that this is desirable when the means and circumstances of the parties permit it.

29. In the instant case there remained an order for Periodical payments to the wife (and children) after property adjustment which means the financial affairs of the parties remain intertwined until the order is discharged in all respects as affecting the wife.

30. Mr. Hemens relies heavily on De Lasala v. De Lasala ⁽¹⁾. The financial arrangements between the parties in that case included dismissal of the wife's claims for maintenance, a lump sum payment and secured provision for herself and the child of the marriage.

31. The arrangements entered into by the parties were approved of by the Court and leave to implement them granted

32. Two matters of interest (inter alia) in relation to the instant case are contained in that case.

"Financial arrangements that are agreed upon between the parties for the purpose of receiving the approval and being made the subject of a consent order by the court, once they have been made the subject of the. court order no longer depend upon the agreement of the parties as the source from which their legal effect is derived. Their legal effect is derived from the court order; and the method of enforcing such. of their provisions as continue to be executory (in the instant case the provisions. of Trust Deeds A and B) is not by action but by summons under the court order pursuant to the liberty to apply, reserved in the instant case by paragraph 8 of the consent order of 23 May 1970. In their Lordships' view there is no relevant maintenance agreement now subsisting which is capable of attracting the jurisdiction of the court under s.15 of the Ordinance." P223

33. Mr. Pilbrow argued strenuously that De Lasala v. De Lasala ⁽¹⁾ may be distinguished from the instant case. I believe this is so but for reasons other than as postulated by him:

"Where a party to an action seeks to challenge, on the ground that it was obtained by fraud or mistake, a judgment or order that finally disposes of the issues raised between the parties, the only ways of doing it that are open to him are by appeal from the judgment or order to a higher court or by bringing a fresh action to set it aside. The test whether a judgment or order finally disposes of the issues raised between the parties is not determined by inquiring whether for the purposes of rules of court relating to time or leave to appeal it attracts the label "final" or "interlocutory". The test is : Has the court that made the order a continuing power to vary its terms, as distinct from making orders in aid of enforcing those terms under a liberty to apply? Since their Lordships have already held that Mr. Justice Huggins, in the exercise of the Divorce Jurisdiction of the Supreme Court of Hong Kong (not its Appellate Jurisdiction), had no power to vary the consent order made by Mr. Justice Briggs on 23 May 1970, the only means now open to the wife to set it aside on grounds of fraud or mistake would be by bringing a fresh action for this purpose." P223 and P224

34. Mr. Pilbrow has submitted that the husband was mistaken as to his net worth at the time he gave instructions to his legal advisers and relies upon this "mistake" as a ground.

35. I believe this submission to be misconceived in an application brought in this manner. The only means of redress on this ground, as held by the Privy Council, is for the Respondent to bring a fresh action.

36. The application in the instant case is brought by statutory authority. I believe the Privy Council were dealing with the then equivalent of Section 4(1)(c) not as in this case an application brought pursuant to 4(2)(c).

37. There is power given by the legislature to vary, etc., a lump sum payment, which payment is to be effected by instalments. This is the position here.

38. Mr. Pilbrow asked that the order be discharged and was at his persuasive best in this regard. I accept I have the power to do this, derived from legislation, but this clearly is a discretionary power, and I shall deal with the exercise of my discretion later.

39. By way of example I was referred to Tilley v. Tilley⁽²⁾.

40. The decision was not handled to me. The only reference being a footmate appearing at page 136 of Jackson's Matrimonial Finance and Taxation : "unpaid balance of instalments discharged : exceptional circumstances."

41. I have no guidance as to what the C.A. in the U.K. considered "exceptional circumstances" to be.

42. A decision to which I referred the advocates to during the hearing ,was that of Hardy v. Hardy ⁽³⁾, where the court postponed an ex wife's lump-sum claim because of "substantial expectations" by the husband.

43. I use this decision merely to show that circumstances may exist to warrant a court postponing a wife's claim - or as the ordinance clearly states "........ suspend any provision thereof temporarily ....".

44. I hold See. 11(1) and 11(2) apply to the instant case and that I am empowered to vary or discharge the order etc.

CONCLUSIONS

(A)     The Judgment Summons

45. Mr. Hemens in support of his client's application suggested that if the respondent were to be subjected to the pressure of having an order for imprisonment made, then his parents would almost certainly come to his aid by making their home in England made available as collateral security.

46. The respondent explained their position, which can only be described as considerably less than affluent. He stated they had been advised not to jeopardize their home. This in my view represented good advice.

47. I hold this is not sufficient reason for a summons to issue, and further in the circumstances investigated during the hearing, the judgment debtor has shown cause why an order for commitment should not be made against him.

(B) The Respondent's Application

48. There are number of matters which I have to consider when determining whether I should "discharge vary or suspend" the order of Mr. Registrar Wilson.

49. If I were to suspend payment then the following matters may be germane, at a later date.

1. Respondent's liabilities may decrease by : -

50. I have come to the conclusion that in order to enable the Respondent to meet all his obligations and to continue meeting them particularly those relating to: -

that the appropriate order would be to suspend payment of the sum of £18,000. This however to be on terms.

51. It is obvious from the wife's affidavit that she requires better accommodation from that as at present endured by her. I believe there should be an increase in the "compensation" payable during any period of suspension. This increase should in my preliminary view be in the region of $500 making a figure of approximately £140 per month available to the wife to rent a property during the interim period, however I wish to be addressed on this.

52. A further possible term upon which I wish to be addressed is whether there should be any charge over the Respondent's interest in the French property.

53. For the benefit of the children I feel there could well be a term that so long as the Respondent is effecting payments in respect of the mortgage on the French property and thereby maintaining an interest in the property that the Petitioner and her children should be permitted to holiday there for a reasonable period or periods in each year.

54. I also wish to hear the parties on the period the adjournment should take.

55. I also wish to hear the parties as to costs relating to both these applications.

(1)    1979 HKLR 214 P.C.

(2)    1979 26 October (unreported). Bar Library Transcript 619 C. A.

(3)    The Times 11.6.1981

Representation:

Mr Pilbrow of Helen A Lo & Co for P.

Mr Hemens of Hampton Winter Glynn for R.