Suzanne Ruth Henderson v. Scott Henderson

HCMP 1780/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO1780 OF 2013

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Before: Hon Au-Yeung J in Chambers

Date of Hearing: 31 July 2014

Date of Decision: 27 August 2014

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D E C I S I O N

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1.This is an application by the plaintiff to amend an order under the slip rule. The defendant opposes on the ground that the plaintiff has consented to the draft order before it was sealed and what the plaintiff is asking for goes beyond what has been ordered by the court.

THE BACKGROUND

2.The plaintiff and the defendant were ex-wife and husband.  The defendant instituted divorce proceedings in Ontario, Canada.  On 15 January 2009, the Superior Court of Justice, Family Court Branch of Ontario granted a maintenance order (“the Ontario AR Order”)for spousal and children support (“the Support Payments”) in the plaintiff’s favour against the defendant.

3.On 22 July 2013, the plaintiff obtained a worldwide Mareva injunction from L Chan J freezing assets of the defendant up to the amount of CAD 803,610.50.  It was said to be in aid of pending registration of the Ontario AR Order.  The Mareva injunction order was amended on 5 August 2013 (“the Chan Order”).

4.The Chan Order contained exceptions that allowed for the defendant’s living expenses at about HK$14,000 per month and a one-off payment of HK$50,000 towards his legal costs.

5.There followed numerous proceedings for (a) continuation or discharge of the Chan Order, (b) registration of the Ontario AR Order under section 7 of the Maintenance Orders (Reciprocal Enforcement) Ordinance, Cap 188 (“MOREO”), and (c) the plaintiff’s application for judicial review of the Hong Kong District Court Registrar’s decision refusing to register the Ontario AR Order under MOREO.  Leave to apply for judicial review has been granted and the application for continuation/discharge of the Chan Order has been adjourned pending the result of the judicial review.    

6.On 4 October 2013, Deputy High Court Judge Hartmann varied the Chan Order.  There followed arguments between solicitors in correspondence over the terms of the variation.  At one stage, each party submitted her/his own draft order to Deputy Judge Hartmann.      

7.Eventually it was the defendant’s draft to which the plaintiff’s solicitors agreed and which Deputy Judge Hartmann approved.  The material parts of the sealed Hartmann Order (“the Hartmann Order”) provided as follows:

“IT IS ORDERD that:-

(1) The Interim Injunction Order dated 22nd July 2013 as amended on 5^thAugust 2013 be varied as follows:-

(i) By way of an exception, the Defendant be allowed to make monthly payments of CAD9,774 to the Family Responsibility Office in Ontario, Canada, for account of the Plaintiff, such payments representing child support and spousal support (‘Support Payment”) pursuant to the Order given by the Superior Court of Justice in Ontario, Canada dated 15^th January 2009;

(ii) Payment in sub-paragraph (i) above shall be made with retrospective effect as from August 2013 until further order. The Support Payment as from October 2013 shall be payable on the 1^st day of November 2013 and thereafter on the 1^st day of the following months or until further order; and

(iii) Subject to the fulfilment of sub-paragraph (ii) above, the Defendant be allowed to use the balance of his monthly salary paid or to be paid into his foreign currency savings account number 648-085843-833 with the Hongkong and Shanghai Banking Corporation Limited, Hong Kong as from August 2013.”

(Underline added)

It is this order which forms the subject matter of this application.

8.It is the plaintiff’s case that the defendant has withdrawn his salary from HSBC without first paying the Support Payments to the Family Responsibility Office (“FRO”).  This has not been denied by the defendant. 

9.Without prejudice to her application for committing the defendant for contempt for breaching the Hartmann Order, the plaintiff seeks 2 things.  Firstly, she seeks to amend the Hartmann Order under the slip rule (“the amendment application”) by replacing paragraph 1 in these terms:

“1. The interim Injunction Order dated 22 July 2013 as amended on 5 August 2013 be varied as follows:

(a) The Defendant do pay CAD$9,774 per month to the Plaintiff via the Family Responsibility Office in Ontario, Canada, such payments being the child support and spousal support (“Support Payment”) accruing under the Order given by the Superior Court of Justice in Ontario, Canada dated 15^th January 2009;

(b) The Support Payment be made from the Defendant’s bank Account with the Hong Kong Shanghai Banking Corporation Limited (“the HSBC”) with Account No.: 648-085843-833 (“the Material bank Account”), whereby the Defendant claims to receive his monthly salary at HK$165,000 from his employer USA Basing Limited;

(c) Subject to the fulfillment of (a) and (b), the Plaintiff be allowed to withdraw HK$89,251.00 (i.e. HK$165,000 – CAD9,774) per month from the Material Bank Account for his living expenses and legal fees in Hong Kong and in the USA;

(d) This Order is deemed retrospectively effective as from 1 August 2013.  The Support Payments for August 2013, September 2013 and October 2013 are payable by the Defendant forthwith and in the manner as prescribed in (a) and (b) above.  The Support Payment for November 2013 shall be payable on the 1^st day of November and the support payment for the months thereafter shall be made on the 1^st day of that month.”

10.Secondly, she seeks an order for the defendant to forthwith pay the Support Payments that have accrued since the Hartmann Order (“the accrued Support Payments”), (“the payment application”).

11.The defendant opposes on the ground that the amendment application purports to re-write the Hartmann Order.  As regards the payment application, the defendant claims that Deputy Judge Hartmann had not made the order for payment as prayed for by the plaintiff. 

12.The plaintiff has filed her 5^th affidavit in support of this application but the defendant has not filed any affidavit in opposition.

A.  THE AMENDMENT APPLICATION

A1.  The legal principles

13.The legal principles are not in dispute.  Order 20, rule 11 of the Rules of the High Court provides:

“Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on summons without an appeal.”

14.In Wong Hung Kar Yee Mimi v Severn Villa Ltd [2014] 1 HKLRD 1088, at §19-20, I have summarized the principles as follows:

“19. … the error or omission must be an error in expressing the manifest intention of the court. In Li Tze Cho v Ching Hua Co (No 3) [1961] HKLR 201, at 205, Reece J held:

But the error or omission must be an error in expressing the manifest intention of the Court; the Court cannot correct a mistake of its own in law or otherwise, even though apparent on the face of it. If the order or judgment of the Court correctly expresses the intention of the Court, it cannot be corrected under this rule or the inherent jurisdiction even if the decision of the Court is procured by fraud or misconception.

20.     A party cannot use the slip rule to insert, into the original order, a provision which was not there, not because of any slip in expressing the court’s intention but because it was not originally asked for: Bank of China v Xinyuan Trading Co unrep., CACV 276/1998, [2000] HKLRD (Yrbk) 77 (21 June 2000), Godfrey V-P.”

A2.  The application before Deputy Judge Hartmann

15.The Hartmann Order arose out of the defendant’s application for variation of the “Exceptions” to the Chan Order governing ordinary daily living expenses and legal expenses (T2/I-K, N-Q)[1]. The question that arose was how much, if at all, should the court agree to by way of a variation.  (T2/Q-T)

16.Mr Leung, counsel for the defendant, draws to my attention that there was no summons before Deputy Judge Hartmann for any order that the defendant do pay Support Payments to the plaintiff in the interim.  That might be true.  However, in my view, that did not preclude Deputy Judge Hartmann from imposing conditions as he did when varying the terms of the Mareva injunction.

A3.  The defendant’s construction of the Hartmann Order

17.Mr Leung interprets that “be allowed to” in paragraph 1(i) to the Hartmann Order to mean that (1) the defendant could choose to pay the FRO or choose not to; (2) before he could withdraw his salary, he had first to pay FRO; (3) if the defendant received salary, he had to pay the arrears from August 2013 plus the payment for a particular month before he could use the balance.

18.I agree to limbs (2) and (3) of Mr Leung’s interpretation.  I disagree that limb (1) was just being permissive in terms.  Read together with the opening words, “IT IS ORDERED THAT … The [Chan Order] be varied …”, paragraph 1(i) of the Hartmann Order meant that the Chan Order was uplifted to the extent stated in that sub-paragraph.  Paragraph 1(ii) of the Hartmann Order as regards accrued and future Support Payments due was clearly in mandatory terms. No choice was given to the defendant not to pay.  Consequently, I disagree with the view of senior counsel for the plaintiff that there was ambiguity in the use of the words “be allowed to”.

19.Mr Leung goes on to submit that the defendant’s assets were frozen only to the extent of CAD 803,610.50.  The defendant could dispose of any excess so long as the unencumbered value of his assets in Hong Kong remained above that amount: paragraph 1(2) of the Chan Order.  He had disclosed provident fund worth US$ 855,550.12 with Cathay Pacific Airways kept at account no. 524717049 with HSBC.  Mr Leung submits that the benefits in the provident fund were “vested”.  In withdrawing the salary, the defendant was not caught by the Hartmann Order.

20.These submissions are, without disrespect, disingenuous for the following reasons:

21.Firstly, that was not the position taken before Deputy Judge Hartmann.  The availability of the provident fund was not even mentioned and (unlike the property in Arizona: T6/H-J) not taken into account as an available asset in Deputy Judge Hartmann’s reasons for decision.  It was clearly an afterthought of the defendant in order to contest this application.

22.Secondly, as a matter of law, Mareva injunction applies to all assets of the defendant, tangible and intangible.  The test must be whether the assets will be available on execution of a judgment, and if they are they can be the subject of the injunction, as its purpose is to aid the court’s process.  See Mark Hoyle, Freezing and Search Orders (4^th ed) 38, at §4.28. 

23.Thirdly, as a matter of fact, the defendant has not shown the provident fund to be an asset immediately available on execution of a judgment. The terms of the provident fund have not been disclosed to the court.  Common sense tells that the provident fund will usually fall due to the defendant upon termination of his employment, expected to be 11 years from now even on the defendant’s own evidence in §21 of his 2^nd affidavit.  The benefits were “vested” to the fund but not to the defendant as yet.  Of course, the right and the benefit to the provident fund are frozen under the Chan Order and will be available for execution at the moment the provident fund accrues to him.

24.Fourthly, if the defendant had genuinely taken the view that the provident fund was an asset available on execution of a judgment, he would not have applied to vary the Chan order.  Instead, having already disclosed in his 2^nd affidavit the existence of the provident fund, his application for variation was effectively for his full income (as opposed to a lump sum) to go to him, without making any provision for the plaintiff and the children (T4/ F-I). 

25.Fifthly, Deputy Judge Hartmann dealt with specifically only one item of the defendant’s assets – the monthly income of about HK$165,000 (T2/N-Q) and not any other resources (T6/F-H).  The learned judge was dealing with ongoing needs as opposed to historical deprivation of (CAD 800,000) out of such limited funds (T5/Q-U).

26.Sixthly, the defendant has chosen to withdraw his salary and not his provident fund.  Therefore, even on Mr Leung’s interpretation in paragraph 17 above, the defendant had to pay FRO first.  The defendant has blatantly failed to do so.

A4.  Comments on the proposed amendments under the slip rule

27.The plaintiff seeks to remove the phrase “By way of an exception” in paragraph 1(i) of the Hartmann Order.  With respect, that would be contrary to Deputy Judge Hartmann’s intention because the matter that came before him was precisely to vary paragraph (1) of the EXCEPTIONS to the Chan Order (T2/ G – K).

28.The rest of the proposed terms were actually in the plaintiff’s draft previously given to Deputy Judge Hartmann’s clerk as mentioned in paragraph 6 above.  There had been no response from Deputy Judge Hartmann or his clerk to that draft.  The plaintiff’s solicitors had not asked for an oral hearing before the learned judge to clarify the status of their draft before the defendant’s draft was approved and sealed.  There was no error or ambiguity in expressing the manifest intention of the Hartmann Order.  I reject the proposed amendments, subject to paragraph 29 below.

29.There is a proposed amendment to the preamble of the Hartmann Order – the inclusion of the 4^th affidavit of the defendant.  There is no objection to it.  I allow the amendment.

A5.  Other amendments needed

30.I find it alarming that HSBC has, for unknown reasons, permitted the defendant to withdraw his full salary without his first paying the FRO.  The Chan Order does not prevent any bank (like HSBC) from exercising any right of set-off it may have in respect of any facility which it gave to the defendant before it was notified of the Chan Order.  This may, eg permit a bank to offset the defendant’s salary income against pre-existing mortgage, but not if he withdraws the balance of his salary in cash or under disguise of his credit cards expenses.  I make no finding against HSBC at this stage without having heard its representation.

31.At the hearing, I have drawn to the parties’ attention that the manifest intention of Deputy Judge Hartmann was for a mechanism to be set up to govern payments to the FRO (“the mechanism”):

“The order, therefore, is that before any further moneys are to be released to the husband, some mechanism acceptable to those who advise the wife is to be set up for the payment of that monthly sum to the Canadian authorities for the onward benefit of the wife. One does not need anything too sophisticated; a standing order with the bank will be sufficient, but it should be an order that those representing the wife are made aware of so that they can be assured that it is happening. The balance of the moneys are then to go to the husband.” (T5/L-P)

32.The defendant was aware of the need for the mechanism as evidenced by his solicitors’ letter dated 4 November 2013.

33.No such mechanism was included in the Hartmann Order.  Had it been there, the plaintiff or banks might have been alerted to the defendant’s unlawful withdrawal of salary earlier.

34.At the end of this hearing, I have imposed some “stop gap measures” pending resolution of the present application and to ensure that the defendant would not repeat his unlawful withdrawal of salary:

“With immediate effect and until further order,

Notwithstanding exception (1) under “EXCEPTIONS TO THIS ORDER” to the worldwide Mareva injunction made by L Chan J on 22 July 2013 as amended on 5 August 2013 (“the Mareva injunction”),

Notwithstanding paragraph (1) of Deputy Judge Hartmann’s order dated 4 October 2013,

(1) The defendant shall not be at liberty to withdraw any part of his salary from his bank accounts, whether in Hong Kong or elsewhere and whether in HSBC account number 648-085843-833 or in any other bank account. Such salary shall remain frozen pursuant to the Mareva injunction.

(2) The parties shall agree upon a mechanism pursuant to pages 5L to P of the transcript for the hearing before Deputy Judge Hartmann on 4 October 2003 (the aforesaid reference to page numbers is to the internal page numbering of the transcript). Such mechanism is to be submitted to Au-Yeung J for approval.

(3) For the avoidance of doubt and subject to the aforesaid, the Mareva injunction shall remain in full force and effect until further order.

(4) There be liberty to apply.”

35.I did not think that there should be any substantial prejudice to the defendant because if he had withdrawn his salary for July 2014 (paid on about 26^th   looking at the past pattern of payment) that should be sufficient to sustain him for about 2 months (up to the end of September 2014) under the effect of the Hartmann Order.

36.Having now considered the full picture, although I have declined to adopt the amendments proposed by the plaintiff, in view of the defendant’s unlawful withdrawals, and payments out by HSBC, I give leave to amend the Hartmann Order by adding a requirement for the mechanism to be agreed upon.  I shall continue the stop gap measures until, amongst others, the mechanism is determined.

37.I wish to point out that the draft amended order attached to the summons was all in red ink.  It was not in the right form. The original terms of the Hartmann Order should have been in black ink with the proposed amendments underlined in red.  The plaintiff’s solicitors should take care not to commit the same error in future, which would waste the court’s time in having to find out the proposed amendments itself.

B.  THE PAYMENT APPLICATION

38.As of the date of this decision, there are 12 months’ Support Payments accrued from August 2013 to July 2014, ie CAD 9,774 x 12 months = CAD 117,288, under sub-paragraphs (1)(i) and (ii) of the Hartmann Order.

39.The plaintiff seeks an order for the defendant to make those payments pursuant to Order 45, rule 8 of the Rules of the High Court, which provides as follows:

“If an order of mandamus, a mandatory order, an injunction or a judgment or order for the specific performance of a contract is not complied with, then, without prejudice to its powers to punish the disobedient party for contempt, the Court may direct that the act required to be done may, so far as practicable, be done by the party by whom the order or judgment was obtained or some other person appointed by the Court, at the costs of the disobedient party, and upon the act being done the expenses incurred may be ascertained in such manner as the Court may direct and execution may issue against the disobedient party for the amount so ascertained for costs.” (emphasis added)

40.The plaintiff’s summons did not invoke Order 45, rule 8 but only the inherent jurisdiction of the court.  Under its inherent jurisdiction, the court has power to ensure that its orders are properly complied with and not abused. This is particularly so when children’s interests were/are involved (T4/M-O).

41.The defendant has not filed an affidavit to refute the plaintiff’s allegation in paragraph 13 of her 5^th affidavit.  Mr Leung confirmed that he had no objection to the contents of the plaintiff’s table there as to the dates and amounts of withdrawal, which apparently have been extracted from the bank statements of the defendant.   

42.Mr Leung, however, submits that Deputy Judge Hartmann has not ordered the defendant to make the Support Payments; the plaintiff was inserting into the original order a provision that was not originally asked for: Bank of China v Xinyuan Trading Co [2000] HKLRD (Yrbk) 77.  See also the defendant solicitors’ letter dated 28 November 2013 stating a similar stance.

43.I repeat my interpretation of the Hartmann Order in paragraph 18 above. The manifest intention of Deputy Judge Hartmann was to give effect to the Ontario AR Order and that the defendant could only use the balance of his salary:

“The position as of 2009 is to the effect that the courts of Ontario had ordered the husband to pay a total sum of maintenance for the two children and for the ex-wife of something in the region of $9,774 Canadian per month. As at today’s exchange rate, this comes to something in the region of $73,598 in Hong Kong currency per month. (T3/C-E)

If I was to make provision for this sum of maintenance to be paid, it would leave the husband, on his current salary, as I understand it to be, with something in the region of $91,000 per month for his daily needs and to help towards financing his litigation. (T3/F-H)

There are orders, which are fairly stringent orders, against the husband, emanating from the courts of Ontario, one being to the effect that he has been in contempt of court. I take that into account when I make these observations. (T3/R-T)

I am not, therefore, going to make an order that allows the Mareva injunction to be varied to the extent that all of the husband’s present income goes to him with no provision being made for the wife and the children. Indeed, in my view, the order having been in force since some time in 2009, I should make provision for the full amount of the order. (T4/O-Q)

I am not, therefore, going to vary the standing order of the Ontario courts. It is not only a question of comity owed by one court to another, it is in recognition of the highly sophisticated system that is operated there and that ensures fairness to all parties, that is to the husband, the wife and the offspring of any marriage. (T5/B-D)

In any event, the order that I make is an interim order. We will, at the end of this month, determine whether the Mareva should continue. The order that I make is a variation of the Mareva and if the order is discharged, this order will be discharged with it. (T5/D-F)

… it is an interim order and, as with any Mareva, it can be varied upon application. (T5/I)

My order will therefore be that the full amount ordered by the Canadian court, that is the court of Ontario, that amount, I am told amounting to some 9,774 Canadian dollars per month, is to be paid to the Canadian authorities under this order of variation, and the balance is to go to the husband, that is to the defendant. (T5/J-L) (emphasis added)

I will leave it to counsel to draft up a satisfactory set of orders as to variation.  I think I have made it quite clear that what I am talking about is that there will be a variation, that it will encompass the amount presently due to the wife and children, that amount to be paid by some acceptable means each month, that the balance will go to the husband. (T6/Q-T)”

44.Even if I am wrong, on limbs (1) and (2) of Mr Leung’s interpretation set out in paragraph 17 above, having chosen to withdraw his salary, the defendant should have paid the past Support Payments in the sum of  CAD 117,288 to the FRO through the plaintiff’s solicitor.  I grant the payment application accordingly.

45.In exercise of my inherent jurisdiction, the stop gap measures shall continue until the defendant has paid the FRO all Support Payments in arrears. For the avoidance of doubt, prohibition from withdrawal of salary applies to salary or income, in any form, whether from any bank account or in cash or otherwise. The stop gap measures will be slightly reworded accordingly.

C.  COSTS

46.Costs should, as a matter of principle, follow the event and be to the plaintiff.  I have considered the history of the proceedings between the plaintiff and the defendant as described in Deputy Judge Sakhrani’s judgment dated 27 November 2013 and transcript of Deputy Judge Hartmann’s decision.  I believe it is no exaggeration to say that the defendant has all along adopted a “catch me if you can” attitude and it surely has been a very draining exercise on the plaintiff’s already bad health and strained financial resources.  On a nisi basis, I order costs against him on indemnity basis, summarily assessed and allowed at $100,000.

D.  ORDER

47.I order as follows:

(1)   The Hartmann Order be amended by adding the 4^th affidavit of the defendant in the preamble as a document considered by the court.

(2)   The Hartmann Order be amended by adding a paragraph after paragraph (1) thereof as follows:

“A mechanism acceptable to the plaintiff (including but not limited to a standing order with the bank receiving the monthly salary of the defendant) shall be set up for the payment of arrears and future Support Payments of CAD 9,774 per month to the Family Responsibility Office, and for the defendant to keep the plaintiff (or her solicitors) informed of such payments.”

(3)   The defendant shall forthwith pay the sum of CAD 117,288 to the FRO, being arrears of Support Payments for August 2013 to July 2014 (both months inclusive), pursuant to paragraph 1(i) and (ii) of the Hartmann Order.

(4)   With immediate effect and until further order,

notwithstanding exception (1) under “EXCEPTIONS TO THIS ORDER” made by L Chan J on 22 July 2013 as amended on 5 August 2013 (“the Chan Order”),

notwithstanding paragraph (1) of the Hartmann Order,

(a)   the defendant shall be prohibited from withdrawing any part of his salary or income from his bank accounts, whether in Hong Kong or elsewhere, whether in HSBC account number 648-085843-833 or in any other bank account, whether in cash or any other form until further order. 

(b)   Such salary or income shall remain frozen pursuant to the Chan Order. 

(words underlined to reflect modifications to the stop gap measures pronounced at the hearing)

(5)   The parties shall agree upon the mechanism referred to in sub-paragraph (2) above to be submitted to Au-Yeung J for approval within 14 days of the handing down of this decision.

(6)   For the avoidance of doubt and subject to the aforesaid, the Chan Order shall remain in full force and effect until further order.

(7)   On a nisi basis, I order costs be to the plaintiff on indemnity basis, summarily assessed and allowed at $100,000.

(8)   There be liberty to apply.

48.I thank counsel for their assistance.

Mr Felix Ng, instructed by Deannie Yew & Associates, for the plaintiff

Mr Paul H M Leung, instructed by Hampton, Winter & Glynn, for the defendant

Please refer to HCMP2796/2014 for the relevant appeal(s) to the Court of Appeal.