FCMC 1399 / 2006
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES
NUMBER 1399 OF 2006
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BETWEEN
| | IISW
(also known as IIW formerly known as IIS) | Petitioner |
| | and | |
| | SDS-W | Respondent |
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| Coram: Her Honour Judge Sharon D. Melloy in Chambers (Not open to public) |
| Dates of Hearing: 6 – 7 and 10 – 11 September 2012 |
| Dates of provision of outstanding information: 18 and 21 September 2012 |
| Dates of the written closing submissions: 19 November 2012 |
| Date of the written replies: 4 January 2013 |
| Date of Judgment: 6 February 2013 |
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J U D G M E N T
(Interpretation of order and variation of children’s maintenance)
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Introduction
1. There are two applications presently before the court that require adjudication namely the petitioner wife’s summons dated the 4 July 2011 and the respondent husband’s summons dated the 20 July 2012. Both centre on the interpretation of a court order dated the 15 May 2007 and matters arising out of that, in so far as it relates to the maintenance for the two children of the family.
2. The parties have been embroiled in a bitter fight ever since they separated in January 2006. The present dispute centres on the meaning and intent of an order following a successful Financial Dispute Resolution hearing in Hong Kong on the 15 May 2007. In essence the issue is whether or not there was a secured maintenance order for the children with an amount of US$250,000 paid into court as security for their maintenance or alternatively whether the sum of US$250,000 represented a lump sum that was to cover the children’s maintenance for a three year period. The wife argues that the order of the 15 May was a secured maintenance order; the husband says that it was not.
3. In either event, even on the husband’s case, the issue of the appropriate amount of maintenance to be paid for the children thereafter i.e. after April 2010 also needs to be determined. The husband claims that his present earnings are minimal and his earning capacity much diminished from before. The wife disputes this and claims maintenance for the children based as far as possible on their previous standard of living in Hong Kong. In particular she is asking that the husband contribute towards the children’s school fees at a prestigious international school in Singapore. Originally the wife asked that the husband continue to pay HK$20,000 per month per child plus the children’s school fees. However in her opening she asks that the husband pay for half of all of the children’s expenses. The parties are at loggerheads with respect to nearly every aspect of the litigation. The credibility of each is in issue. The husband presently resides in Vietnam with his second wife and her four children and other family members. The wife resides in Singapore with the two children of the family. The parties previously lived and worked in Hong Kong. The husband does not see the children often and access is also in dispute. It seems that the wife has concerns about the children visiting Vietnam because it is not a signatory to the Hague convention. There has been very limited access in Singapore. The husband appears to be very aggrieved about this although no formal applications have been made with respect to the arrangements for the children.
The issues
How should the consent order dated the 15 May 2007 be interpreted?
What date should the new order be effective from?
What funds should be made available for the children’s maintenance and what order should be made?
In determining these issues consideration will also be given to the following points:
Has there been material financial non disclosure by either party and should the court draw adverse inferences accordingly?
What are the present financial resources of each party?
What is the present earning capacity of each party?
Background to the marriage
4. The parties met in Taiwan in 1999 where they were both engaged in the finance industry. They married in Hong Kong in January 2001 and relocated to the territory shortly thereafter. The wife is of Turkish descent and the husband is British. The wife was on a dependant’s visa and could not work in Hong Kong initially. In any event the parties had two children shortly after they relocated, namely E, a boy, who was born in May 2002 and O, a girl born in April 2004 and the wife was fully engaged in caring for them during this time. It seems that the marriage floundered and in January 2006 the husband told the wife that their relationship was at an end. This was then a fairly short marriage of approximately 5 years duration that produced two children. It seems that both parties were struggling emotionally at the time of the separation and in particular the husband was said to be experiencing from stress at work. There was then a flurry of litigation; several emergency applications were issued including a summons for injunctive relief, as the wife attempted from her perspective, to secure the financial position for both herself and the children in the short to medium term. The husband relocated to Vietnam in March 2007 in order to start a new life. He joined a new company in Vietnam as their Chief Executive Officer at a much reduced salary from his package in Hong Kong. Following the economic crises in 2009 the husband resigned from this position with effect from April 2009. He said that he had no choice but to do so. In May 2009 the husband invested in two of his own new start up ventures in Vietnam. The wife meanwhile remained in Hong Kong and began working in a full time capacity with an insurance company. In September 2009 she was asked by that company to relocate to Singapore, which she did. The husband began living with his new partner in early 2008 and they formally married in May 2010 in the United States. In September 2009 the husband’s eldest step son was diagnosed with acute leukaemia and he underwent treatment in Singapore.
Background to the litigation
5. At the adjourned FDR hearing on the 15 May 2007 the parties eventually agreed terms inter alia as follows:
AND UPON the Petitioner’s undertaking to the Court and the Respondent that in consideration of the provisions therefore made herein, she will not seek to vary the financial provisions for the children until after the month of April 2010.
AND UPON each party agreeing to waive and not enforce any Order for costs made in his or her favour during these proceedings.
AND UPON the Petitioner and the Respondent acknowledging and agreeing that the following terms are in full and final settlement of all claims that either party has against the other and their respective estates whether in these proceedings or otherwise and whether within this jurisdiction or elsewhere.
AND UPON the application dated 15th May 2007 by the Petitioner to make absolute the Decree Nisi pronounced herein on 6th September 2006.
……
4. All properties held by either the Petitioner or the Respondent and whether real property or chattels shall remain in the sole ownership of the party in whose name it is registered or in his/her possession.
5. The Respondent shall pay to the Petitioner within 14 days of decree absolute a lump sum of US$900,000.00, and upon payment all the Petitioner’s claims for ancillary relief for herself shall be dismissed.
6. The Respondent shall pay into Court within 14 days hereof a lump sum for the children of the family of US$250,000.00 which shall be paid out to the Petitioner for the children of the family as follows for so long as the Petitioner and the children of the family reside in Hong Kong:-
(a) HK$40,000.00 per month as maintenance for the children of the family (i.e. HK$20,000.00 per child per month).
(b) HK$50,000.00 per month for the children’s share of the continuing rent at [the former matrimonial home] until January 2008 or for so long as the Petitioner and the children continue to reside there whichever shall be earlier.
(c) The school fees for the children of the family shall be paid out of the said sum for each term in advance upon presentation of the invoice from the school for tuition fees and capital levies by either the Petitioner or the Respondent.
(d) The said sums at (a) and (b) above shall be paid from the funds held in Court on the 24th day of each calendar month commencing on 24th May 2007.
6. The wife’s view appears to be that the above order was a secured periodical payments order and that the level of maintenance as stated in paragraphs 6 (a) – (c) above was to continue until further order. Even on a cursory view there are difficulties with this interpretation, given the wife’s undertaking and the fact that it is clearly stated that the amounts to be paid out were contingent on the wife and children remaining in Hong Kong. The husband is clear however that the US$250,000 was an interim lump sum payment designed to cover his maintenance obligations towards the children until April 2010.
7. Following the FDR hearing the father returned to Vietnam and the mother continued to reside in Hong Kong. Shortly thereafter in August 2007 the wife obtained new employment in Hong Kong on a full time basis in the finance sector. During the FDR hearing the wife had said that she only expected to be able to obtain part time work. She was then asked by her company to relocate to Singapore and on the 21 July 2009 I granted her leave to permanently remove the children to Singapore. At the same time I also made an order that
2. The balance of the sum of US$250,000 previously paid into Court by the Respondent pursuant to paragraph 6 of the Order made by Her Honour Judge S. D’Almada Remedios dated 15th May 2007 be fully paid out to the Petitioner for maintenance for the Children forthwith;
8. As things turned out, there was very little money left in the kitty by that time. Almost the entire sum of US$250,000 had been spent on the children’s maintenance during the intervening two year period.
9. It should be noted that the mother did not issue an application at this point in Hong Kong seeking to be released from her undertaking and for further maintenance from the father for the children. Indeed she said in her affidavit in support that she intended to issue an application in Singapore for maintenance – which she did (see Subordinate Court Action No MSS 6XXX/2009). She claimed inter alia in those proceedings that
7. Indeed for some months before my relocation to Singapore with the Children the funds that the Respondent had been ordered by the Hong Kong District Court to deposit as security in the “District Court Suitors Funds” were drawn down and exhausted, and he had made no attempt to deposit more money into the said funds account. Please refer to page 29, where at the last ledger entry dated 7 December 2009 it is clear that the fund for the maintenance of my children was now in deficit, as it was only able to make one last final disbursement of HK$2,206.00.
This fund was only a security fund to ensure payment by the Respondent of the interim maintenance amounts. The security payment was by no means a once-and-for-all maintenance payment for the Children.
(See the 1st affidavit of the wife dated the 20 January 2010 in Action No 6XXX/2009)
10. The wife sought maintenance from the court in Singapore in the sum of S$11,001.60 per month. She asked that it be backdated to 8 September 2009 – the day after she drew down the final payment from the US$250,000 held in the Hong Kong court.
11. The husband contested the amount of maintenance claimed and said that it was contrary to the wife’s undertaking in any event. He also disputed forum on the basis that Hong Kong was already seized of the matter and that it was a more appropriate forum to deal with the matter in any event. On the 16 April 2010 the husband offered what some might consider as a derisory amount of only S$130 or HK$806 per month per child.
12. The case was tried. However the wife had also issued proceedings under reciprocal enforcement legislation (Reciprocal Enforcement Maintenance Order or REMO) for alleged arrears of maintenance. The Singaporean court held that she could not issue two sets of proceedings simultaneously and required her to choose which one to pursue. She decided to pursue the enforcement action and withdrew Action No MSS 6XXX/2009. She was ordered to pay costs in the sum of S$20,000. On the 6 December 2010, the Singaporean court dismissed the wife’s reciprocal enforcement action on the basis that the husband was not resident in Singapore. When the wife failed to pay the costs in relation to Action No MSS 6XXX/2009 the husband issued bankruptcy proceedings against her.
13. The matter then returned to Hong Kong. On the 28 February 2011 the wife issued an ex parte summons for a charging order against the husband’s property in Hong Kong on the premise that there were outstanding arrears of maintenance for the children. It should be noted that the wife had issued a similar application previously in relation to an outstanding amount of US$75,000 relating to her lump sum payment. There were several hearings and on the 19 April 2011 a charging order nisi was granted. The husband sought to have this discharged. On the 21 June 2011 it was ordered that the charging order would remain in effect. On the 4 November 2011 a further direction was given that the issue of the charging order would be revisited after the conclusion of these proceedings. It should be noted that the husband also initially disputed forum given that the parties had already litigated the matter in Singapore. The wife did explore the option of further litigating in Singapore but appears to have decided against it as she would have been barred from seeking payment of any alleged arrears. She was also advised that she would need to issue a fresh application and that this would be considered “de novo”.
14. In the wife’s Hong Kong summons dated the 4 July 2011 she sought the following relief:
1. The Order of DDJ A. Kot [should read DJ Remedios] made on 15th May 2007 be clarified/amended/varied in the manner attached hereto in red to reflect the true intention of the Court and/or the parties; (The wife asked that the order be amended so that it read as a secured maintenance order)
2. Alternatively, the Petitioner be discharged from her Undertaking contained in the Order of DDJ A Kot [DJ Remedios] made on 15th May 2007 that she will not seek to vary the financial provisions for the children until after the month of April 2010;
3. The Respondent do pay maintenance for the children of the family of HK$40,000 per month (HK$20,000 per child) backdated from September 2009 until the youngest child reaches the age of 18 or ceases full time education whichever is the earlier;
4. The Respondent do pay school fees and related expenses for the children of the family back dated to August 2009 until the youngest child reaches the age of 18 or ceases full time education whichever is the earlier;
5. The Respondent do pay a lump sum of HK$1,270,745 for the children’s maintenance from September 2009 to April 2011 and school fees from September 2009 to June 2011;
6. The Charging Order: Notice to Show Cause be made Absolute alternatively;
7. In the event that the Charging Order: Notice to Show Cause is discharged, there be an injunction Order to secure the property for arrears of maintenance/future secured maintenance payments;
8. Time for service of this Summons be abridged; and
9. There be an Order for costs in favour of the Petitioner.
15. The husband eventually countered with his own summons dated the 20 July 2012 as follows:
1. In the event that the Petitioner succeeds in her application by way of Inter-partes Summons dated 4th July 2011 to the effect that the maintenance payable to the children of the family at the total sum of HK$40,000 and the children’s school fees are to continue to be payable, the maintenance order for the children of the family dated 15th May 2007 be varied downwards/discharged with retrospective effect as from September 2009;
2. In the event that the Respondent’s position that the lump sum payment of US$250,000 is to provide for the children’s maintenance and school fees until April 2010, the maintenance for the children of the family be varied downwards/discharged with retrospective effect as from April 2010; and
3. Costs be provided for.
Discussion
How should the consent order dated the 15 May 2007 be interpreted?
Introduction
16. In the order dated the 4 November 2011 it was directed that
6. The Affidavits filed in the Singapore proceedings may stand as if the same had been filed in these proceedings;
17. I have therefore had the benefit of perusing three lever arch files which contain the pleadings and other related documents pertaining to the actions in Singapore. What is interesting to note is that it appears that many of the same points that were raised in Action No MSS 6XXX/2009, have been raised again before me in the present action and that neither party appears to have made much effort to satisfactorily deal with those points in the intervening period. For example the husband complained in the Singaporean proceedings about the wife’s failure to make full and frank disclosure of her assets – especially in relation to the properties held by her in Turkey and the way in which the lump sum of US$900,000 has been utilized. Documentary evidence was sparse then and it was sparse when the matter came back before me. Likewise the wife accuses the husband of material non disclosure with respect to his business dealings. The husband maintained then, just as he maintains now, that he has little documentary evidence in support of what he says because that is the way business is done in Vietnam. And so it goes on. I should say that as a general comment that I did not find either party to be entirely credible.
18. In so far as the central point is concerned – namely the interpretation of the order dated the 15 May 2007, I have now had the benefit of reading the transcript of the FDR hearing. From that it is clear that the intention was not that this should be a secured maintenance payment order. It is equally clear that the sum of US$250,000 was not a one off payment for the children’s maintenance. Rather it was agreed that the husband would pay the sum of US$250,000 into court so that the wife could claim against that sum on a monthly basis over the next three year period as prescribed in the order i.e. HK$40,000 per month for the children (HK$20,000 per child per month), HK$50,000 as a contribution towards the rent until January 2008 or for so long as the wife and children resided in Hong Kong – whichever was the earlier and the payment of the school fees (to include tuition and capital levies). The inherent difficulty with this is that US$250,000 was not a sufficiently large sum of money to cover these payments for a three year period. When the Judge asked this very question during the FDR hearing she was told that this would partly depend on interest rates – but that the sum should cover payments until January 2011. When the Judge further queried whether the agreement was that the money would last until 2011 or 2010 she was assured that it should last until April 2010. On that premise the wife’s undertaking was altered to that date. She was told that there was “a sort of mutual undertaking not to vary until the money in court has run out”. The Judge was also told that the payments were premised on the wife remaining in Hong Kong and that it was anticipated that the husband would seek to vary, if for example, the wife moved back to Turkey where the cost of living was cheaper. Counsel for the wife was obviously concerned about the structure of the order. Counsel for the husband also made it clear that the husband’s intention was that there should be a lump sum against which the wife should be able to claim for the children’s maintenance for a period of time, while he was unlikely to be earning very much and when he was in the process of getting himself back on his feet. The husband has since said in his affidavits that he also had concerns about the wife’s “alleged excessive spending” and that from his perspective the payment into court meant that the monies for the children would be secured for the following three year period.
19. Thus it seems to me that it was clear that it was never the intention that the husband should continue to pay the sums identified and that the wife should only seek payment from the money held in court, if he didn’t pay. Rather the intention was that the wife should rely on those funds – hopefully for a three year period, but that in the event that that wasn’t the case then it seems to me implicit in the order that she should be able to come back to court and ask to be released from her undertaking and depending on the circumstances seek further maintenance.
20. Thus I remain of the view that it was quite wrong of the wife to present her case both in Singapore and Hong Kong as she has done. Further the husband’s stance that her undertaking was in some way “absolute” is also incorrect. Given that it seems to me that there can be no arrears of maintenance as such.
What date should the new order be effective from?
21. I have had the benefit of receiving a copy of an agreed schedule in respect of the Court Ledger showing the payments made out to the wife for the benefit of the children from April 2007 until 7 September 2009. It is clear from that schedule that interest had not accrued on that sum as had been anticipated. Further the wife drew down on the sum of US$250,000 as agreed. There is nothing improper in her approach. It is simply that the agreed sum was not sufficient for the agreed three year period. In any event the order was only designed to cover the children’s expenses whilst they were resident in Hong Kong. Once the wife left Hong Kong the matter should have been revisited. Consequently to seems to me that any new order should take effect from September 2009.
What funds should be made available for the children’s maintenance and what order should be made?
In determining this issue consideration will also be given to the following points:
Has there been material financial non disclosure by either party and should the court draw adverse inferences accordingly?
What are the present financial resources of each party?
What is the present earning capacity of each party?
The law
Orders for children
22. Under s 5 of the Matrimonial Proceedings and Property Ordinance, Cap 192 the court can make orders for periodical payments, secured periodical payments and lump sum or sums for the benefit of a child. Further under section 6 it is possible to order that one party transfers to the other a property or properties for the benefit of the child and there can also be a settlement of property – such as a trust set up for the benefit of a child. If a court makes an order under either of these sections it is also possible under section 6A to make an order for sale of a property. Section 7(2) adds that in all child related applications:
… it shall be the duty of the court in deciding whether to exercise its powers under section 5, 6 or 6A in relation to a child of the family and, if so, in what manner, to have regard to all the circumstances of the case including the following matters, that is to say-
(a) the financial needs of the child;
(b) the income, earning capacity (if any), property and other financial resources of the child;
(c) any physical or mental disability of the child;
(d)the standard of living enjoyed by the family before the breakdown of the marriage;
(e) the manner in which he was being and in which the parties to the marriage expected him to be educated;
and so to exercise those powers as to place the child, so far as it is practicable and, having regard to the considerations mentioned in relation to the parties to the marriage in paragraphs (a) and (b) of subsection (1), just to do so, in the financial position in which the child would have been if the marriage had not broken down and each of those parties had properly discharged his or her financial obligations and responsibilities towards him.
23. I should add that whilst it is true that the court always attempts to put children in the same financial position as if their parent’s marriage had not broken down, it is also generally accepted that in a great many cases the standard of living of the parties will inevitably reduce on a divorce. This will in turn affect the standard of living enjoyed by the children.
Variation of maintenance
24. In so far as the application to vary is concerned, each parties’ respective application to vary is made pursuant to section 11 (7) of the Matrimonial Proceedings and Property Ordinance Cap. 192, which provides that:
“(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of the matters to which the court was required to have regard when making the order to which the application relates ……”
25. It is accepted that in considering a change of circumstances, I may look at the case de novo. In other words the court is not necessarily fettered by the existence of a previous order. I may look at the situation afresh and make an order based on the parties’ existing financial circumstances. (See Ch 3.131 Jackson’s Matrimonial Finance and Taxation, 7th edition)
26. The parties also have a duty to make full and frank disclosure of their means and a failure in that duty can lead the court to draw an adverse inference. (See Baker v Baker [1995] 2FLR 829). In this case both parties are asking that I draw an adverse inference.
Introduction
27. The wife now asks that the husband pay half of the children’s expenses. She sets those expenses at a reasonably high level commensurate to the children’s position as international children who are living in an expatriate community in Singapore. The husband says simply that he cannot afford to pay and that if the wife chooses to live at such a high level then she must bear those costs from her own resources. The added difficulty of course is that any order that the court makes will be very difficult if not impossible to enforce in Vietnam. Consequently the wife asks that the order be enforced against the sale of the husband’s property in Hong Kong by way of a charging order absolute or injunction.
Has there has been material financial non disclosure by either party and should the court should draw adverse inferences accordingly?
28. The wife’s submissions are very emotive. Unnecessarily so in my view. She talks of a “cheats charter” or a “non-discloser’s dividend". She is clearly convinced that the husband has assets or other financial resources at his disposal and that he is deliberately hiding them. But at the end of the day what has she been able to show? Counsel says that the husband has failed to disclose his former pension/retirement plan. In reply the husband points out that his former employer has gone into liquidation and that obtaining this information is very difficult. Payment of the pension must also be in doubt. Counsel also says that he has failed to produce his previous passport. Whilst this is true the husband’s explanation is also quite plausible. He says that he surrendered his old passport when it was renewed and does not recall receiving the old one.
29. The husband has explained how his funds have been utilized since the divorce. The wife questioned this in both these proceedings and the Singaporean proceedings. However I accept that the husband has been affected by the Asian financial crises. I do not believe that he deliberately engineered his fall from grace from the first Vietnamese company that he joined. I also accept that the two start ups have not been successful. The suggestion is that he has used these ventures as a cover and that he has deliberately hidden funds out of the reach of the wife.
30. Whilst I do not accept all that the wife has said in this respect, I do have concerns about the husband’s true involvement in his wife’s jewellery business. The husband sold a property in Bali in June 2011 for US$340,000 and received the net proceeds of sale in the sum of US$314,500. He says that he lent US$280,000 of this sum to his second wife and has referred to a convertible loan agreement dated the 1 July 2011 to this effect. The loan was for a three year period and one of the terms of the loan was that:
1.4 The loan shall be convertible into the shares of the Company, or its subsidiaries, upon the expiry of the term, and be eligible for dividends from the profits of the Company. The terms of conversion shall be determined by a fair market valuation of the net assets of the Company. The price of the conversion shall be set at a 15% discount to this fair market valuation.
31. However there is no evidence to show that the sum of US$280,000 has been paid directly to the business. Instead the husband refers to a number of transactions in his Standard and Chartered bank account as being part of the loan. However these transactions amount to just over HK$300,000 and include some very small amounts of money e.g. HK$600. This simply begs belief. In short I simply do not believe the husband’s stance on this.
32. The husband, for his part, also accuses the wife of material non disclosure – especially in relation to the US$900,000 lump sum that she received on the divorce and the properties in Turkey. These were issues in the Singaporean trial and they have been issues in this trial. In the wife’s Form E dated the 27 February 2012 the wife said:
Depletion of savings. I was not given ongoing maintenance following the divorce and instead received a lump-sum payment. In the last two years I have more or less depleted this sum on child maintenance, house upgrade in Bodrum Golkoy and legal fees.
33. The wife has produced a schedule setting out how the US$900,000 was apparently utilized. There is very little documentary evidence in support of her assertions in this respect. For example she says that she spent US$250,000 on the Bodrum renovation. There is no evidence of that. The wife also includes payment of other miscellaneous items in her schedule including her tax bill in 2011. To be frank I find this all a little hard to accept. I have also been provided with very little evidence in relation to the properties in Turkey. For example there are no up to date valuations. I am asked simply to believe the wife and to accept a lot of what she has said at face value.
34. At the end of the day I do not find either party particularly credible; very little evidence has been produced by either side to support what at times have been quite outrageous assertions. Each party has put their case at its highest. Neither has been particularly convincing.
What are the present financial resources of each party?
35. I accept that both parties have some additional financial resources at their disposal. According to the wife she has assets of approximately HK$13 million. She has invested approximately US$160,000 in two life investment policies. As I have said there is a question mark over the whereabouts of some of the remaining funds from the US$900,000. I also query the actual value of her property portfolio.
36. The husband says that he has very little in the way of remaining financial resources. As I have said his involvement in his second wife’s business is also open to speculation. This is a very high end bespoke jewellery design business. The husband is the Chairman. On his own case he has also invested in this business. He says he receives a nominal retainer of US$1,000 per month. However it seems that this business provides for the whole family of four children and other relatives. They appear to have a comfortable life style. All four children attend an international school in Ho Chi Minh City. The husband says his current monthly expenses and those of the family amount to HK$128,201 per month. Putting it at its lowest it seems that the husband is certainly benefiting from this business, in which he has a clearly defined role and in which he also has a financial interest.
37. There are other anomalies. For example, on the husband’s own evidence, he spent just under HK$1.8 million (SG$283,494) on a wedding gift for his wife in May 2009 to celebrate their first two years together. He now says that this was not the best decision that he has ever made. He has also invested significant sums in the two start up ventures. He also sold his property in Singapore in addition to the property in Bali referred to above. At no point was there ever any attempt by the husband to make some further financial provision for the children over and above the US$250,000. This was at a time when he must have been aware that on the wife’s case there was nothing left from the US$250,000 and it was clear that he did have other financial resources at his disposal.
38. The husband still owns a property in Hong Kong valued in the region of just over HK$4 million. The husband estimates that it has a net equitable value of c HK$2.8 million. According to the husband’s most recent disclosure as at the 8 January 2012 there was an outstanding mortgage on that property of just over HK$1 million. In addition he had an unsecured loan with the mortgagor of just under HK$200,000.
What is the present earning capacity of each party?
39. According to the most up to date documentation provided by the wife as at the 1 April 2011 she was earning a base salary of S$197,529 per annum or S$16,460.75 per month. However if one were to average out the salary that she received into her bank account for the last six months of 2011 that figure rises to approximately S$17,400 or HK$107,880 per month. This is probably inclusive of other small allowances such as the annual car and cash allowance. She also receives a bonus of up to 50% of her salary. For the year 2010 she received a bonus of S$95,000 or HK$589,000. Thus in total the wife’s average monthly income appears to be in the region of just under HK$157,000 per month pre tax. She receives other “flexi-benefits” which she says she uses for health insurance and dental expenses.
40. The husband claims that he is presently earning very little. He presently receives the equivalent of HK$7,800 from his position as Chairman of his wife’s company. In addition there is a small net income from the rental of the Hong Kong property. He has also been pursuing a number of advisory positions on the boards of companies in Vietnam, one of which he has been lucky enough to recently secure. In total the husband estimates that he presently has an actual income of HK$20,800 per month.
41. The wife says that this is “litigation window dressing” and that the husband has a significant earning capacity in his own right which he does not seek to exploit because of these proceedings. Whilst I would accept that the husband does have a significant earning capacity – I also accept that this might now be difficult for him to fully realize. I certainly accept that he is unlikely to be able to earn anything like what he was earning previously with the finance house in Hong Kong. He has been out of the market in Hong Kong since 2007 and out of the market completely since 2009. It will be very difficult for him to break back in – especially if he continues to reside in Vietnam and if those in the banking industry continue to be retrenched. I accept though that he should be able to obtain other non executive directorship positions. He also presents as a bright and resourceful man. I am sure that other business opportunities may beckon.
What funds should be made available for the children’s maintenance and what order should be made?
42. The wife asks for a 50% contribution towards the children‘s expenses. Generally in children’s maintenance cases I look first to the financial resources of each party and in particular to their relative earnings. In the event that the parties are earning about the same I would normally accept that they should be contributing towards both the children’s direct and indirect expenses equally. Where they are not then the expenses are normally divided on the basis of the parties’ actual earnings or other financial resources.
43. Consideration is also given to the level of expenses claimed and I would normally make a number of rulings based on submissions made in relation to individual items.
44. I have given a great deal of thought to the appropriate approach to be taken in this case and the difficulties that are likely to be encountered with enforcement in the event that a normal maintenance order is made. The wife is now earning a good salary – certainly far in excess of that anticipated when the parties were negotiating the order of the 15 May 2007. She also has a number of other assets. She is certainly in a position to provide for the children notwithstanding issues about her own disclosure.
45. The wife spends a great deal on the children’s extracurricular activities c S$2,954 or c HK$18,300 per month. I accept that this seems excessive in the circumstances. Half of that amount would seem to me to be a more reasonable figure. I will allow S$1,500 or HK$9,300 per month. The wife puts the general expenses for herself and the children at S$10,945 or HK$67,859 and her own expenses, inclusive of tax at S$4,035 or HK$25,017 per month. If one puts the school fees to one side for the moment and I allow S$1,500 for the children’s extracurricular activities then the total for the children’s expenses comes to S$5,628 or HK$34,893 per month. In total then the wife spends approximately S$20,608 or HK$127,769 or say HK$128,000 per month. The wife should be able to pay this sum from her own resources.
School fees and related expenses
46. The wife’s main concern – quite understandably has been in relation to the children’s school fees. The husband has argued that the children should go to local schools, if the parents do not have the means to pay for international school fees. However it is clear that this is not a solution in this case. I accept that it would be very difficult for these children to be educated in the local Singaporean system. I have also taken due notice of the fact that the husband’s four step children all attend a good international school in Ho Chi Minh City. Clearly education is a priority for both families. I am sure that it would have been the husband’s intention for the children to receive the best possible education had the parties remained married.
47. Both children were originally attending the C school in Singapore. The wife has however recently enrolled the eldest child at another very prestigious international school with boarding facilities, without obtaining the husband’s consent. She says that it is not her intention to board E for the time being. The wife was unable originally to provide the court with a comparison of the fees between the new school and the children’s original school and other alternatives. She has now done so. From this it is clear that the fees for day pupils are similar in each school.
48. In the circumstances then it seems to me that the husband should be responsible for the children’s school fees. Although he says that he is unable to pay for these from his own income at present, he does have another financial resource at his disposal, namely the property in Hong Kong that could be used for this purpose. As stated above I also accept that the husband most probably has other financial resources at his disposal.
Conclusion
49. I will therefore discharge the wife from her undertaking contained in the court order dated the 15 May 2007 not to seek to vary the financial provision for the children until April 2010.
50. The husband shall pay a lump sum to the wife equivalent to the children’s school fees (i.e. tuition fees and capital levies) for the period from September 2009 to date, such figure to be calculated and provided to the court with documentary evidence in support.
51. The issue of the charging order nisi shall be adjourned for further argument as directed on the 4 November 2011. In the meantime the charging order nisi shall remain in effect.
52. The father shall be responsible for payment of the children’s school fees going forward. The parties are invited to make submissions with respect to this. I will also invite the parties’ legal representatives to make submissions with respect to the appropriate structure for the court order.
Costs
53. Given my concerns as expressed in this judgment and given that both parties will be coming back to court in any event I will reserve costs for further argument.
| ( Sharon D MELLOY )
|
| District Judge |
Ms E Ho of Messrs Hampton Winter & Glynn for the Petitioner
Mr Neal Clough instructed by Messrs Stevenson Wong & Co for the Respondent