W v. F

FCMC 809/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO 809 OF 2004

________________________

________________________

R U L I N G
(Strike out application)
________________________

1.On the face of it, the background to the present application is fairly typical.  The petitioner wife issues a judgment summons for non-payment of the children’s maintenance (see the judgment summons dated 5 March 2014).  The respondent husband responds with an application to vary the maintenance down (see notice of application to vary dated 6 June 2014). In reality, however, this application is far from typical and comes at the end of what appears to be 10 years or so of fairly constant litigation following an eight-year marriage.  There are also three children of the family who are now aged 16, 14 and 12 years respectively, and who have grown up in the shadow of this litigation.

2.The present application before the court is the wife’s application dated 25 August 2014, seeking to strike out the husband’s notice of application to vary, on the basis that it is frivolous or vexatious; it may prejudice, embarrass or delay the fair trial of the action; or it is otherwise an abuse of the process of court.  She also seeks to rely on the court’s own ability to regulate its own affairs in this respect.

Background

3.By way of background to this application, I should add, in short, and in the words of Ms Rattigan - and I am referring now to the skeleton submission beginning at paragraph 6:

“6. The financial proceedings were settled following mediation and a Consent Order was made based on the mediation agreement by Judge C K Chan on 9 June 2006. There was a division of assets on a clean break basis between the parties and the Respondent was ordered to pay to the Petitioner monthly periodical payments for the maintenance of the children of the family in a sum of $82,500, i.e. $27,500 per month per child. The payments were also ordered to be subject to the annual increase of the Hong Kong Consumer Price Index (CPI).”

“8. In January 2010, the Respondent applied to vary the children’s maintenance as ordered under the 2006 Consent Order. The application was heard by Judge C K Chan who on 15 February 2011 made an order to the effect that the Respondent’s maintenance payments for the children be reduced to $40,000 per month. The judge held that other parts of the 2006 Consent Order would remain the same, including the increase of maintenance in line with the CPI.”

“9. The Petitioner successfully appealed this decision and in a judgment of 27 March 2012 the Court of Appeal:

(i) overturned the February 2011 order of Judge C K Chan;

(ii) dismissed the Respondent’s variation application;

(iii) restored the 2006 Consent Order;

(iv) ordered that the Respondent repay the Petitioner $552,500, which was (paid to the Respondent as a result of C K Chan’s 2011 order); and

(v) awarded the Petitioner her costs of the appeal and below.”

“11. The Respondent was clearly unhappy with the findings of the Court of Appeal and sought leave to appeal. On 19 September 2012, his application was dismissed by the Court of Appeal (Justices Cheung and Lam). Despite this, the Respondent sought leave to appeal to the Court of Final Appeal on 16 October 2012.”

“12. On 18 December, the Court of Final Appeal dismissed the Respondent’s application with costs to the petitioner.”

4.It is, therefore, very clear that, in considering any further application by the husband, I am absolutely bound by the findings made by both the Court of Appeal and Court of Final Appeal, and that it is not open to me to rehear matters that have already been determined. This is so, even if I were to agree with the husband’s original stance or, even if putting it somewhat lower, I had some sympathy with him. In order for the husband to be able to successfully issue a further application for a variation less than two years after the determination by the Court of Final Appeal, there must be a significant change of circumstance necessitating such an application. In other words, is there a trigger?  Has something happened of sufficient import that would necessitate such an application being made? Ms Rattigan for the wife says the court should, in considering this, look to the period between the determination by the Court of Final Appeal and the husband’s application, whereas the husband says that I should look to the period from Judge C K Chan’s ruling on 15 February 2011 to the date of his application, given that that was the last time that there was a hearing on the facts. I would tend to agree with that. However, the onus is still on the husband to show that there is something new that has necessitated his application.  It seems to me that, in the circumstances, this is so, even though it is said that the court is able to hear such applications de novo. That cannot be the case where, in effect, the same issues are potentially being re litigated, as here. I also have to be careful to ensure that there is no appeal through the backdoor. These points are referred to in part in the Court of Appeal’s decision and reference can also be made to the decisions in HCTT v TYYC [2008] 3 HKC 86 and AEM v BFM [2008] 3 HKLRD 36. With respect, I agree with what is said in those judgments.

5.The husband says that he cannot point to a single thunderbolt event and that different strands have led to the present situation.  He says that a change of circumstances has taken place over time and that that should be sufficient to allow his application to proceed.

6.The difficulty with that stance is that it does appear from the evidence that the husband is seeking to go over old ground. In particular, it should be noted that in the Court of Appeal judgment dated 27 March 2012, Hon Lam J made the following findings, and I am now going to actually refer to the Court of Appeal decision:

At paragraph 20, he said:

“ In our view, clause E of the Mediation Agreement clearly provided that the 30 million lump sum payment was paid to the Petitioner by way of ‘spousal maintenance’ as a clean break division of the assets. There is no suggestion whatsoever in the agreement that the Petitioner would be expected to utilise part of such payments to maintain the children.”

He goes on at paragraph 25:

“Thus, it was more of a matter of the Petitioner being told at some stage that the Respondent might change firms or cease working as a solicitor at some point in time in the future than her agreement to such” a “move.  Further, she had reasons to believe that he had other means of generating income, even if he were to quit practising as a solicitor.”

And the next section is important:

“We do not accept the submission that the necessary implication of Clause D(g) is an agreement to the effect that upon cessation of practice on the part of the Respondent resort must be made to the assets of the parties to keep up with the maintenance of the children.”

He then goes on - I will not read it all - but at the end of paragraph 26, he says:

“It is not a necessary conclusion from such” a “review...that the Petitioner should be required to utilise her capital resources to pay part of the maintenance for the children.”

And at paragraph 27, he adds:

“In any event, the fact remains that there is” “great disparity between the earning capacity of the respondent and that of the petitioner.”

And at paragraph 31:

“We are of the view that had the proper question been addressed, there was simply insufficient justification for the exercise of the power of variation in the present case. Ms Irving submitted that given the accumulated wealth of the family, the Respondent could afford to retire at this age and he should not be penalised for making such a choice. That may be correct. On the other hand, the exercise by him of this choice cannot be allowed to impinge upon the welfare of the children and the long-term security that the Petitioner needs in respect of the lump sum payment made to her. As found by the Judge, the Respondent has sufficient means to keep up with the existing level of maintenance for the children. There is no reason why he should not be required to take the financial consequences for his own choice.”

7.Thus, it seems to me that it is not open to the court to now consider an application to vary that is centred on the wife contributing towards the children’s maintenance from her so-called spousal maintenance, (ie the lump sum of 30 million that she received on the divorce).  Further, the Court of Appeal’s interpretation of clause DG stands. They also found that there was a great disparity between the earning capacity of the wife and the husband, and that, given that it was the husband’s choice to retire at age 49, that he must now bear the consequences of that choice, which includes continuing to be wholly responsible for the children’s maintenance.

8.Further, in the determination dated 18 December 2012, in which the Court of Final Appeal dealt with the husband’s application for leave to appeal to the CFA, the Chief Justice said as follows - and this is at paragraph 7:

“Essentially, on the facts of the case, the Court of Appeal saw no reason to vary the original order. The Court was of the view that the Judge had erred by failing to give sufficient weight to the original agreement as to how maintenance should be dealt with. Further, while it was true that the Husband had ceased working as a solicitor, he nevertheless had a vastly superior earning capacity compared with the Wife, and the original maintenance for the children was an expense he could easily afford. Nothing in the original Mediation Agreement, in particular, clause D.g thereof, indicated that in the event of his ceasing to work for his previous law firm, this would somehow automatically reduce the amount of maintenance payable to his children. Indeed, it is noteworthy that the Husband had at no point sought to reduce the amount of maintenance his three children should have. This case was simply that the wife ought to contribute something towards the maintenance.

9.So what then is the husband’s case on variation now? In his affirmation in support of his application dated 6 June 2014, he points, inter alia, to the fact that:

(a) his asset base has decreased from just over 58.3 million to 50.8 million.  He says that he is now in a very precarious financial position and that the running costs of his various assets are significant and that there are other difficulties associated with them.

With respect, the fact that the husband admits to having assets of over 50 million puts him in exactly the same financial position as he was in at the end of 2010, when the matter was heard by HH Judge C K Chan.  It was on that basic premise that the Court of Appeal came to the conclusion that it did. 

(b) the husband sets out his attempts to find alternative employment and to otherwise increase his income. 

However, in view of the Court of Appeal’s finding that the maintenance levels should not be varied as a result of the husband’s decision not to work, it is not possible for this matter to be reopened on that basis either. 

(c) Lastly, the husband refers to the so-called agreement reached between the parties in mediation in September 2013, which has been vehemently denied by the wife. 

The parties’ former mediator, Mrs H, has confirmed that no agreement was reached.  I accept what she says in that respect. Thus, these three points do not provide a proper basis for a variation application on the part of the husband.

10.In his affirmation dated 10 September 2014 filed in response to the affidavit filed in support of the wife’s application to strike out, the husband goes over more old ground, setting out his position with respect to his retirement, which seems to be that he had always anticipated that the maintenance for the children would be varied down. At paragraph 7 of that affidavit, he says, halfway down:

“What now needs to be addressed is the appropriate arrangements which should operate since I have stopped working full time as a lawyer for more than five years, during which time I have not only paid all school fees and medical costs, but also child maintenance in an amount I could not possibly have envisaged at the same rate as I agreed to pay during my time working full time for L. That has caused me to sell assets, unrealised capital and property at a much faster rate than I had planned and could even be unsustainable, as I shall elaborate below.”

With respect, that is neither here nor there, given the fact that the Court of Appeal has determined that, in the circumstances of this case, the husband should be wholly responsible for the children’s maintenance.

11.There are also other references which show clearly, despite the husband’s protestations to the contrary, that he does not fully accept the Court of Appeal’s ruling. For example, at the beginning of paragraph 10, when talking about the petitioner’s conduct, he says:

“Let me illustrate her approach to my seeking a reasonable compromise on the reduced level of child maintenance following my retirement in 2009, bearing in mind such a reduction was fully anticipated in the 2006 mediation agreement.”

And again at paragraph 11:

“Also, my statements cannot come as a surprise to the petitioner, as I have been seeking to find a sustainable and fair basis to fund child costs since 2006, when the petitioner agreed with me to revise child maintenance after my agreed retirement in 2009. For so long as the petitioner chooses not to agree to the anticipated reduction in child maintenance, I am forced to try to achieve it, whether by discussion, mediation or court application. I think this is at the core of why these proceedings have gone on for so long. I also believe that for the next 10 years of child maintenance to be sustainable, a reduction is more sensible than, ignoring for these purposes that the petitioner agreed I would retire by 2009, my attempt to return to legal work.”

However, the Court of Appeal specifically found that a reduction in maintenance was not fully anticipated and that this could not be inferred from the mediation agreement 2006 and that the wife had not agreed to this in any event.

12.The husband also argues that it can no longer be inferred that he has a greater earning capacity than that of the wife. With respect, I do not agree and, in any event, whether that is true or not is largely immaterial, given the Court of Appeal’s ruling.

13.Finally, the husband says at paragraph 25:

“I believe all the changes of circumstances described in the paragraphs above are still current and relevant and are not affected by the Limitation Ordinance or similar legal constraints. Those changes in circumstances are still the cause of my current financial difficulties, and they have been exacerbated by 5½ years of paying as yet not reduced child maintenance payments, something I never expected after my retirement from L. Clearly, I still own some valuable assets, which I could have tried to sell earlier in these proceedings. However, I am extremely nervous and reluctant to sell too hastily, thereby to give up income earned from them and possible improvements in value over time. In particular, I am desperately trying to hold on to assets until I know the extent of my obligations over the coming 10 years to 2024 and in the belief that the petitioner and I must find a resolution which is fair and, most important, sustainable before I engage in any further sales.”

With respect, there is nothing here that is new. Thus, I accept that any further hearing on variation would essentially be a rehearing on the facts, which this court is not permitted to do.

The law

14.I have been taken to the law and the applicable legal principles on strike out, as set out in Order 18, rule 19 of the High Court Rules and generally under this court’s inherent jurisdiction. I do not intend to repeat them here.  Suffice it to say that I accept that this is a plain and obvious case for striking out. In particular, I accept that this application was essentially an attempt to relitigate matters.  Although the husband may say that this is the only route left open to him, the fact remains that he is not permitted to rehash those issues which have already been determined by the Court of Appeal.

15.I do not intend, in the circumstances therefore, to deal with the submissions that have been made in relation to vexatious litigation.  I do not think there is any need for that and I intend to make an order in terms of paragraphs 1(c) of the wife’s summons dated 25 August 2014, which refers to the abuse of process.

Costs

16.In the circumstances, it seems to me that there is no reason why costs should not follow the event in the normal way.  So the husband shall pay the wife’s costs of and occasioned by her application dated 25 August 2014 on a party and party basis, to be taxed if not agreed, and there shall be certificate for counsel.

Ms Rattigan instructed by Haldanes, for the petitioner  

The respondent appeared in person