PKY v. CHM
HTML content
FCMC 3927 / 2015
[2025] HKFC 85
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES NO. 3927 OF 2015
----------------------------
BETWEEN | ||
| PKY | Petitioner | |
| and | ||
| CHM | Respondent | |
------------------------
| Coram: | His Honour Judge G. Own in Chambers (Not Open to Public) |
| Date of Hearing: | 23 July 2024 |
| Date of Closing Submission: | 16 August 2024 |
| Date of Judgment: | 16 May 2025 |
-------------------------
J U D G M E N T
(Variation of Lump Sum Instalments)
-------------------------
Introduction
1. This is the trial in respect of an application taken out by way of Summons by the Respondent on 30/6/2022[1]. Although the parties’ marriage had ended, I will conveniently refer to the Petitioner as “W” and the Respondent as “H” in this Judgment.
2. The terms of H’s Summons read as follows :-
“(a) The Respondent be discharged from his undertaking and his obligation to pay the lump sum of HK$17,000,000 (“Lump Sum”) by instalments under paragraph 1 of the Order of Deputy Judge G. Own (as District Judge G. Own then was) dated 12 June 2015 (the “Order”); and/or
(b) Further or alternatively, there be a variation of the Order to the effect that the Respondent shall pay any outstanding balance of the Lump Sum by way of a monthly instalment of HK$10,000 or a monthly instalment of such amount as the Court thinks fit; and/or
(c) Further or alternatively, there be a variation of the Order to the effect that, in lieu of paragraph 1 of the Order, the Respondent shall pay a monthly periodical payment of maintenance at the rate of HK$10,000 per month (or such periodical payment as the Court thinks fit) to the Petitioner; and/or
(d) Further or alternatively, there be a variation of the Order to the effect that the lump sum payable to the Petitioner be varied to such amount as the Court thinks fit……..”
3. The Order in respect of which H was seeking variation was granted under a Consent Summons dated 12/6/2015 signed by the parties where both of them were legally represented (“Consent Order”).
The “Consent Order”
4. The terms of the Consent Order was a full and final settlement of the parties’ respective ancillary reliefs against each other in these divorce proceedings. There are various recitals setting out parties’ agreement, acknowledgement and undertaking to the Court and to each other.
5. Under the Consent Order, H was to pay to W a lump sum of HK$17,000,000 by way of 72 monthly instalments, the date(s) and amount(s) of each segment of the instalments was set out in detail in a table under Recital G of the Consent Order. The 1st instalment started on 1/5/2015 and the 72nd instalment to be paid on 1/4/2021.
6. Under Recital H of the Consent Order, parties agreed that there would be a “grace period” in H’s favour as follows :-
“AND UPON the Petitioner and Respondent agreeing and undertaking to the Court and to each other that in the event the Respondent shall default in making any payment(s) under Recital G of the Consent Summons, the Respondent shall be given a grace period of 90 days (“the grace period”) to settle the arrears and/or subject to the mutual consent of the Petitioner and the Respondent, to try to agree with a new payment schedule within the grace period. In the event the Respondent still fail to make any payment as stated in Recital G of the Consent Summons or in the event no fresh repayment schedule is agreed by the parties at the expiration of the grace period, the Petitioner shall be at liberty to take out enforcement proceedings against the Respondent for the balance of the lump sum arrears payable under Recital G of the Consent Summons.”
7. Under Recital J of the Consent Order, W was to transfer all her shares of the company “KBTL” to H for nil monetary consideration and whereupon W shall resign from all her positions as director and secretary from the said “KBTL” within 30 day of signing the Consent Summons.
8. It is undisputed that H defaulted in making the 45th to 72nd instalments and that he had only paid HK$200,000 for the 44th instalment, which was HK$290,000, hence leaving a balance of HK$90,000 outstanding for the 44th instalment. Under Recital G, the 44th instalment was to be paid on 1/12/2018.
9. W had issued 4 Judgment Summonses[2] by way of enforcement against H for those sums due under the 44th (part), 45th to 72nd instalments. Given the present application by H for discharge/variation of his payment obligation under the Consent Order, all the Judgment Summonses were adjourned sine die with liberty to restore pending disposal of H’s application.
Background
10. The parties married in October 1987. There are 2 children born out of the marriage, namely a son born in 1988 and a daughter born in 1994.
11. During the course of the marriage, H and W built up a business under the name of “KBTL”. W was a director and shareholder of the company together with H. According to W, the business of “KBTL” was very successful and regularly earned profits of over HK$30 million per year[3].
12. Sadly, the parties’ marriage broke down irretrievably and ended up with W filing a Petition for divorce in April 2015 relying on the fact of “One Year Separation and Consent”.
13. Decree Nisi was granted in June 2015 which was made absolute 2 months later in August 2015.
14. Both parties were legally represented in the divorce suit. Their respective ancillary reliefs were agreed on terms and was resolved amicably with the assistance of their lawyers by way of the said Consent Summons.
H’s grounds of application
15. H in his 2nd Affirmation[4] filed in support of his Summons set out 3 heads upon which his application was premised, namely, (a) material change of circumstances[5]; (b) his current financial status[6]; and (c) W’s financial status[7].
(a) Material change of circumstances
16. In or around April 2016, H once had meetings with various entities who were familiar with listing companies in Hong Kong. H had been advised that he could re-organise his 100% owned business under the company “KBTL” and to have it listed in the GEM Board of the Hong Kong Stock Exchange (“HKEx”).
17. Given that he had had a criminal conviction record back in 2002, H was advised that his criminal conviction would pose as an impediment to the process of listing “KBTL” on the HKEx. Hence, also upon further advice, H decided to disassociate himself from his company “KBTL” to ensure a smooth listing process to take place.
18. In or around December 2016, H first transferred 95% of his shares (9,500 shares) in “KBTL” to his son with the remaining 5% shares (500 shares) transferred to one “CY”[8], who was the finance and administration manager working for his company “KBTL” since May 2006. These transfers were said to be made at nil or a nominal consideration. Having made those transfers, the arrangement was that H himself would continue to stay with “KBTL” as a senior consultant, with a fixed salary and discretionary commission, on top of which he could still continue to be financially supported by “KBTL” by having access to the profits of the company.
19. On 30 June 2017, H also resigned as a director of “KBTL”.
20. On 2 January 2018, the company by the name “Axx Logistics Holdings Limited (“ListCo”) was incorporated as the corporate vehicle for the listing of the company “KBTL”. As the listing of the ListCo was approaching, the financial and legal advisers assisting the ListCo who was “CY” began to raise concern about H continuing to have access to large sums of “KBTL” profits. Admittedly, H said in his 2nd Affirmation that he was naive in that when he decided upon listing his company “KBTL” and to make the transfer of his shares and to pass on the business to his son, he did not realise that this would affect his entitlement to receive financial support from his own company “KBTL” [9].
21. In July 2018, when the “ListCo” listing application was formally presented to the HKEx, “CY” became increasing concerned about the propriety of “KBTL” making payment on H’s behalf to W under the terms of the Consent Order. As a result, H said he could no longer have free access to the profits of “KBTL” in the way as he used to do so in the past when he was the director and shareholder of the company[10].
22. Hence, this was how the material change of circumstances came about.
(b) H’s current financial status
23. H started with the submission that the business of “KBTL” and subsequently the ListCo was hit very hard by the social unrest in Hong Kong, the trade war between China and the United States, and also the outbreak of the Covid-19 pandemic. H went on at paragraphs 33 to 35 in his 2nd Affirmation referred to various figures in the Annual Reports for the year ended March 2020 and 2021 to try to show the business income of “KBTL”/ListCo was affected by the economic downturn in Hong Kong and worldwide.
24. H said he was only receiving a monthly income of HK$49,670[11] and the total monthly expenses are around HK$56,682, with part of those expenses being subsidized by his cohabitee Miss “IC” [12].
25. H further said the latest balance within all his bank accounts with HSBC was HK$141,052.35 as at 23 June 2022.[13] H’s total deposits across all his BOC bank accounts was only HK$2,234.50.[14]
26. For his monthly salary, H said it was deposited into his bank account with Dah Sing Bank where there was also an outstanding mortgage loan with the bank for around HK$3 million which need to be repaid.[15]
27. H said he was approaching 60 years of age and made the submission that with his latest monthly income as a senior consultant, without major role in the management and also without a stake anymore in the company “KBTL”, his financial predicament rendered it impossible to continue making the monthly instalments under the Consent Order to W[16].
(c) W’s financial status
28. H first made the submission that he was being “misled” by W on her financial status at the time of negotiation of the terms of the Consent Summons. There was no financial disclosure by either of them when the Consent Summons was entered into.
29. During such negotiation, W had represented to him that she had no money and no property of her own. W had demanded him to pay her the lump sum for her to purchase a property. H then went on at length and for pages setting out his discovery of W having signed a sale and purchase agreement to purchase a property by the name “Double Cove Starview” in October 2014, which was 7.5 months before signing the Consent Summons.[17]
30. Further, H said W had also sold 2 car parking spaces in Oscar by the Sea in 2014 and both of which were purchased back in 2002. The sale of the 2 car parking spaces generated profits of HK$398,000 and HK$425,000 respectively to W.[18]
31. In October 2015, W had also purchased a property at King’s Commercial Building at HK$1,890,000 which she sold in 2019 for HK$1,960,000.[19]
32. Further, H discovered that a property by the name “Ocean Supreme” was purchased under the name of the daughter in July 2019. H did not believe the daughter could afford the purchase and he believed it was W who funded the purchase but using the name of the daughter.
33. In summary, H said he would not have agreed to pay the lump sum amount or the instalment payments had W fully disclosed that she had been actively involved in property investment.
34. Finally, H made the submission that W was able to earn HK$80,000 a month pre-covid 19 whilst her monthly expenses were only around HK$50,000. H believed that with those instalments which he had already paid to W, W was fully capable of sustaining herself with ample surplus.
35. H in his Form E dated 27/10/2022[20] set out his general and personal expenses as follows :-
“4.1 General
Item Amount Rent HK$ Mortgage instalments HK$ 19,675.71 Utilities (electricity, gas, rates, telephone & water) HK$ 2,300.00 Management fees HK$ Food HK$ 4,500.00 Household expenses HK$ 1,000.00 Car expenses HK$ Insurance premia HK$ 100.00 Domestic helper(s) HK$ 4,630.00 Other (specify) HK$ Total monthly household expenses HK$ 32,205.71 4.2 Personal
Item Amount Meals out of home HK$ 1,100.00 Transport HK$ 900.00 Clothing / Shoes HK$ 300.00 Personal grooming (including haircut and cosmetics) HK$ 200.00 Entertainment / presents HK$ 500.00 Holiday HK$ 1,000.00 Medical / Dental HK$ 200.00 Tax HK$ 3,783.58 Insurance premia HK$ 6,903.57 Interim maintenance Contribution to parents Dependent family members Other (specify) Total monthly personal expenses HK$14,887.15 4.3 Children
School fees HK$ Extra tuition fees HK$ School books and stationery HK$ Transport to school (including school bus) HK$ Medical/Dental HK$ Extra Curricular Activities HK$ Entertainment/presents HK$ Holidays HK$ Clothing/Shoes HK$ Insurance premia HK$ 1,705.00 Lunches and pocket money HK$ Other Transport HK$ Child-minding fees HK$ Uniform HK$ Others (specify) Instalments for the purchase of car (for daughter) HK$ 5,500.00 Total monthly expenses for children HK$ 7,205.00
Total Monthly Expenses (4.1 + 4.2 + 4.3) HK$54,297.86
W’s Opposition
36. H’s alleged material change of circumstances solely arises out of the listing of his company “KBTL” on the GEM Board. On the evidence and H’s own case, however, it was actually another corporate vehicle “ListCo” that was listed with the HKEx. H’s transfer of all his share holdings in “KBTL” allegedly to ensure the listing process was thus unwarranted. W submitted the so-called “re-organisation” of his company “KBTL” for the purpose of listing simply gave H an additional benefit of hiding his interest in the company, its assets and business to create the façade of poverty. Further, H had not accounted for the proceeds that came from the listing.[21]
37. H’s transfer of his shares in “KBTL” which are valuable assets but for essentially no or nil consideration, especially his shares to “CY” who was merely an employee of the company “KBTL”, was irrational acts pointing to the inescapable fact that the transfer was never a genuine transaction at arm’s length. There was no business, common or commercial sense for H to do so. H simply took steps to dissipate his shares in the company for nil or nominal consideration was to evade his liability to pay W under the Consent Order.[22]
38. H’s alleged material change of circumstances was out of his own creation.[23]
39. As to H’s alleged financial status, W made reference to the Consolidated Statement of Profit and Loss Account of “ListCo” for the financial year ended March 2021[24], which was the alleged difficult period of time of the China-US tensions and Covid 19 pandemic, when there was shown a general revenue of around HK$380 million with a comparatively minor loss of only HK$7.7 million.[25]
40. Going through the same Consolidated Statement for “ListCo”, W noticed that actually “ListCo” was able to increase its bank deposits by over HK$8 million from the year 2020 to 2021 and was also able to increase its total assets, less current liabilities, by HK$34 million.[26]
41. W also undergone analytical review of “ListCo”’s Annual Report 2021[27] which shows H’s interests in “ListCo” via the son and “CY” was actually holding 68.8% of it[28]. Applying such percentage to the net equity of “ListCo” at HK$72,624,000[29], it came up with H’s financial interest in “ListCo” was around HK$50 million.[30].
42. Further, W noticed from the same Consolidated Statement of “ListCo” that it was able to increase its equity from around HK$44.5 million to about HK$72.6 million from the years 2017 to 2021.[31]
43. W also took issue with H’s failure to fully disclose his Dah Sing Bank account statements.[32]
44. As to H’s submission in respect of her financial status, W commented that this was totally irrelevant. W maintained her case that the lump sum was her share of the matrimonial pot of assets whereby H had already had the entirety of the “KBTL” shares after she had transferred her shares to H for the lump sum.[33]
45. W in her Form E dated 25/10/2022[34] set out her general and personal expenses as follows :-
“4.1 General
Item Amount Rent HK$ Mortgage instalments HK$ 9,000.00 Utilities (electricity, gas, rates, telephone & water) HK$ 4,000.00 Management fees HK$ 2,303.00 Food HK$10,000.00 Household expenses HK$ 1,000.00 Car expenses (Fuel : $5,000.00 + Car Park $11,000, Insurance & Maintenance: $1,500.00 HK$17,500.00 Insurance premia (for household) HK$ 200.00 Domestic helper(s) – Part Time Helper HK$ 2,000.00 Other (specify) HK$ 2,500.00 Total monthly household expenses HK$47,503.00 4.2 Personal
Item Amount Meals out of home HK$ 5,000.00 Transport HK$ 2,000.00 Clothing / Shoes HK$ 4,000.00 Personal grooming (including haircut and cosmetics) HK$ 7,000.00 Entertainment / presents HK$ 3,000.00 Holiday HK$ Medical / Dental HK$ 2,000.00 Tax HK$ 9,500.00 Insurance premia HK$ 3,000.00 Interim maintenance HK$ Contribution to parents HK$ 5,000.00 Dependent family members HK$ Other (specify) HK$ Total monthly personal expenses HK$40,500.00 4.3 Children
School fees HK$ Extra tuition fees HK$ School books and stationery HK$ Transport to school (including school bus) HK$ Medical/Dental HK$ Extra Curricular Activities HK$ Entertainment/presents HK$ Holidays HK$ Clothing/Shoes HK$ Insurance premia HK$ Lunches and pocket money HK$ Other Transport HK$ Child-minding fees HK$ Uniform HK$ Others (specify) HK$ Total monthly expenses for children HK$
Total Monthly Expenses (4.1 + 4.2 + 4.3) HK$88,003.00
The Law
46. The jurisdiction of the Court in applications for variation of maintenance order was contained in section 11 of the MPPO which provides :
“(1) Where the court has made an order to which this section applies, then, subject to the provisions of this section, the court shall have power to vary or discharge the order or to suspend any provision thereof temporarily and to revive the operation of any provision so suspended.
(2) This section applies to the following orders, that is to say –
(a) any order under section 3;
(b) any order made by virtue of section 4(1)(a) or (b) or 4(2)(b);
(c) any order made by virtue of section 5(2)(a) or (b) or 5(4);
(d) any order made by virtue of section 6(1)(b), (c), (d) or (e) on or after granting a decree of judicial separation;
(da) any order made by virtue of section 6A; and
(e) any order made by virtue of section 8(5), 8(6)(a), (b), (d) or (e) or 8(7)(b).
………
(3) ..……..
(4) ……….
(5) ……….
(6) ……….
(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……..”
47. The approach of the Court has been summarised in the leading case of AEM v. VFM (Variation of Maintenance)[35] as follows :
“The power to vary a periodical payment order was expressly provided for by s.11(1) of the MPPO. The modern approach as required by s.11(7) was for the Court to have regard to all of the circumstances of the case. It was not required to proceed from the starting point of the original order but to look at the matter afresh. An increase in the wealth of the Husband was a relevant factor to be taken into account. At the same time the basis and effect of the original order were relevant factors to which the court on variation should pay regard and there should not be a radical departure from the approach taken by the parties themselves when they had entered into an agreement embodied in a consent order”.
48. In considering whether there is a material change of circumstances, the court may look at the case de novo. In other words, the court is not fettered by the existence of a previous order. Thus, the court may look at the overall situation afresh and make an order based on the parties’ existing financial circumstances and needs. The court has a broad discretion in applications relating to variation.[36] In so doing, the court should also bear in mind that an application to vary the terms of a settlement embodied in a consent order are not to be lightly entertained unless the party seeking to disturb the same can show good and substantial cause.[37] In the case of L v.C[38] where Stock JA said :
“The courts must be astute in this field to guard against the manipulative litigant who seeks to undo an agreement…… and to bear in mind the factors, quite clear now as a result of developed authority, which might go to vitiate such agreement……”
49. In the case of HCTT v. TYYC[39], Mr. Justice Lam (as he then was) agreed with the judgment of Hon Tang VP (as he then was) in the case, citing L v. C and said :
“43. I hasten to add that the courts in the family jurisdiction must be equally astute to guard against unmeritorious applications for variation by litigants who have second thoughts about settlements they have knowingly reached on their own volition.
…………
45. Further, in many instances, one or both parties are acting in person. Lack of legal representation should not be regarded as a vitiating factor in an ordinary sense.
46. Therefore it would go against the modern ethos of family dispute management if the court were to entertain lightly an application to vary the terms of a settlement embodied in a consent order.
47. I think the following approach suggested by Stock JA at para 42 of L v. C [2007] 3HKLRD 819 at p.841, with slight modifications, can equally serve as a good guidance for deciding whether an application for variation of periodical payments in a consent order should be entertained,
“an agreement [on periodical payments] is ‘presumptively [not to be varied without material change of circumstances]’, the burden being on the party seeking to achieve a different [terms] to show good and substantial cause why the compact should not be respected, and ….. the scope for so doing is one directed at an injustice in the circumstances in which the agreement came to be concluded or in clear injustice occasioned to one of the parties by reason of event unforeseen at the time of the agreement were the agreement to be enforced to its letter."
50. As for lump sum, it is trite law that the Court’s power to order a lump sum can only be exercised once (see de Lasala v. de Lasala).[40] Further, the Courts have jurisdiction to vary orders made by consent. Section 11 does not impose any restrictions on variation of consent orders (see G v. G).[41] However, the jurisdiction to vary lump sum order payable by instalments must be exercised with caution.
51. In the case of Tilley v. Tilley[42] where the wife successfully applied for variation to waive one of the instalments of a lump sum under a consent order payable to the husband on the basis that she could not pay the
husband without selling the home where she and the children were then living, and in that case where Ormrod LJ had said :
“……it was very undesirable to create the impression that orders for lump sum payments by instalments could be readily, or were likely to be easily, varied on change of circumstances. Parliament had given the court full jurisdiction to do it but it was to be borne in mind that people relied on these things being carried out. It should be plainly borne in mind that the husband had a continuing obligation to the children which offset the consent order and, had there not been that continuing liability for these children, and had the execution of this agreement not inevitably been going to lead to the dispossession of the children from their home, the result of the case might have been very different. That was the right approach of the court in this case.”
52. In the English Court of Appeal case of Westbury v. Sampson[43], where Bodley J at paragraph 58 of the Judgment said :
“The re-opening under s 31 of the overall quantum of lump sum orders by instalments, especially when made as part of a package intended to be final (and all the more so when ordered by consent following an agreement) should only be countenanced when the anticipated circumstances have changed very significantly, and/or for cogent reasons rendering it quite unjust or impracticable to hold the payer to the overall quantum of the order originally made.”
53. In the Hong Kong Court of Appeal case of CH v. MEH[44], where Cheung JA at paragraphs 26 of the Judgment said as follows :-
“(2)……The underlying principle that supports this view is the public policy of finality in litigation, so that orders, and especially consent orders, providing for a clean break, are not set aside unless there is a compelling reason to do so…...
(3) In order to give effect to this principle, the Barder v. Caluori approach requires a new event to strike at the heart of the order so as to invalidate the basis, or the fundamental assumption, upon which it was made. Similarly under the application for variation route, the anticipated circumstances must have changed very significantly or when it is unjust or impracticable to hold to the original order.
(5)…...The lump sum order, although payable by instalments, was an order made once and for all. Obviously that was the foundation upon which the parties had chosen to regulate their financial positions. As observed by the authorities, the fortuitous circumstances of allowing the payer to pay the lump sum by instalments should not widen his opportunity to reopen the quantum issue.”
54. Guided by these authorities, I will now consider each of the reasons provided by H for his application.
Discussion
55. The material change of circumstances, on H’s own case, was brought about by H’s own decision to list his 100% owned company “KBTL” in the GEM Board of the HKEx. Such “listing” decision led to H transferring all his shares in “KBTL”, where H did not deny in his evidence that the shares are of values, at what he described at nil or nominal consideration to his son and “CY”. Further down the “listing” process, H’s case was that no payment(s) was received by him or his company “KBTL” upon being listed under “ListCo”.
56. All the above led to H no longer able to be financially supported by “KBTL” and his case was that he could no longer continue with those remaining instalments under the Consent Order since 1 December 2018. Even for the 44th instalment of HK$290,000, he could only afford to pay HK$200,000 leaving the balance of HK$90,000 unpaid.
57. The submission that the decision to “list” his company “KBTL” came about around April 2016, after the Consent Order dated 12 June 2015, does not assist H’s case. Whilst H could possibly argue and say that at the time of the Consent Order in 2015, it was not foreseeable that his financial ability to pay the lump sum instalments would be affected by the “listing” arrangement a year later, H could not deny such “listing” was completely his own choice. The “listing” decision, rightly or wrongly taken, and even if it was a commercially sound and reasonable one to take at the time (of which there was no such finding by this Court), would not exonerate or obliterate H’s personal liability to pay W under the Consent Order.
58. That said, any change in H’s financial circumstances arising from such decision, even if the change was a material or drastic one, was brought about by himself. He only had himself to blame or to take full responsibility of it. This was completely out of his own “frolic” and could not conveniently be seized upon as a ground for seeking variation or discharge.
59. Further, I also find H’s evidence on his transfer of shares, both as to the need to do so and also allegedly at nil or nominal consideration, incredible.
60. First, H produced no documentary evidence on details of his criminal conviction record in 2002. There was also no expert evidence produced by him to confirm that such criminal conviction record (if there was one) would impede the listing process of “ListCo”, yet another separate and newly incorporated entity, as opposed to listing H’s own company “KBTL” at the GEM Board.
61. Secondly, I agree with W’s observation and submission that there was no common or commercial sense for H to transfer the fruits of all his years of hardworking reflected by the valuable shares (my emphasis) in “KBTL”, the value of which was readily borne out by H agreeing to pay the lump sum of HK$17,000,000 to “buy out” W’s portfolio for regaining 100% shareholding (10,000 shares). It strikes one’s sense of logic for H to transfer away all his shareholdings (9,500 + 500 shares) at nil or nominal consideration; in particular, the 500 shares to an employee “CY”.
62. Thirdly, during cross examination on the Report and Financial Statements of “KBTL” for the year ended 31 March 2018[45] in respect of an entry of “Amount due to a former director” under the Current Liabilities section for the sum of HK$12,003,156 in 2018[46], H’s answer was that he had no idea about it and he had not received such sum. He said he was not clear that he could ask for such sum from the company. I do not believe H.
63. Fourthly, within the same item of “Amount due to a former director” under the Current Liabilities section in 2017 where the sum due was HK$19,045,983, H was asked if he had ever received around HK$7 million from the company given that the amount outstanding due to a former director in 2018 was reduced down to some HK$12 million odd dollars. H’s answer was that he did not know how to answer “唔識答” and then said if he had received it, his bank statements would show. Plainly, H was avoiding the question rather than providing an answer.
64. Fifthly, H was further asked about paragraph 9 of the same Report and Financial Statements under the section “Dividend Recognised as Distribution”[47] where it said :-
“The Company declared a final dividend of HK$1,500 per share, totalling HK$15,000,000, for the year ended 31 March 2017 to the then sole shareholder during the year ended 31 March 2017.”
65. H provided the answer (Not sure) “唔肯定”; (I was not clear) “我唔清楚” and (Disagreed) “唔同意” in his reply.
66. From the above, I find H was evading proper and important questions asked upon him and he chose to provide unforthcoming and nonsensical answers in reply. I find against H on his credibility and credentials.
67. W’s Counsel in his Final Submissions referred to a transcript of conversation between W and the said “CY”, who was at all material times the only person as the “go-between” W and H on payment of the instalments, where the phrase (Boss) “老闆” was used by “CY” to refer to H. This conversation took place on 7 May 2019 when H had already resigned as the director of “KBTL” and alleged was only employed as a consultant in the company. Given that no contention was raised by H on those transcript of conversation[48] produced by W which formed part of her Exhibit “PKY-16”, nor did H arrange “CY” to explain why he would still call H as “Boss” in 2019, I accepted W’s submission that the truth was more probable than not that H still retained proprietorship of “KBTL” in 2019 despite his transfer of shares in 2016 and resignation from directorship in 2017.
68. Submission was also made to the same MPF account number was used by H despite his change of status from a director of “KBTL” to become a salaried employee as a consultant would suggest that H continued to be the proprietor of “KBTL”. In the Annual Member Benefit Statement of Manulife dated 1 May 2022[49], it showed the date of inception was 1 April 2008 and the date of employment was 23 May 1995. In my view, these are compelling factors to support W’s belief that H remained to be the proprietor of “KBTL”, more probable than not, was the truth. To recap, H’s alleged “employment” as a consultant only started in July 2017 after his resignation from directorship. H was later promoted to become a senior consultant on 1 September 2019[50].
69. For the above reasons and my finding against H on his credibility and credentials, I reject his submission that there was a material change of circumstances of which he could rely upon to seek a discharge (complete or partial) or a variation of those unpaid instalments of the lump sum (44th (part), 45th to 72nd instalments) which has now been long overdue.
70. Further, there was evidence adduced by W showing H previously owned a property under his sole name in Yuen Long (“Yuen Long Property”) for investment and he was living in another rented property. In August 2019, the Yuen Long Property was sold. The completion statement dated 30 August 2019[51] showed the Yuen Long Property was sold for HK$6,680,000 and the net proceeds of sale received by H was HK$5,330,512.33 (initial deposit HK$200,000 + further deposit HK$468,000 + final payment HK$4,662,533.12).
71. H’s Form E dated 27 October 2022 showed he purchased a property in Tai Po (“Tai Po Property”) in December 2019 for HK$6,500,000 with the aid of mortgage from Dah Sing Bank, the amount of the outstanding mortgage was HK$3,438,560[52]. This tally with his evidence earlier that he owed Dah Sing Bank mortgage loan in the region around HK$3 million which he need to repay[53].
72. When questioned by this Court, H agreed that the net proceeds of sale of the Yuen Long Property could have been used to pay the instalments due to W but H then said he also need to buy a property for himself. H admitted that he had utilised the net proceeds of sale from Yuen Long Property towards buying the Tai Po Property and also spent part of it for “KBTL” business in Mainland China (my emphasis). There was no further disclosure or voluntary particulars from H on details of the said “KBTL” business in Mainland China.
73. In my decision, H’s financial status should be viewed at and considered upon in substance and in context. H’s mere “say-so” is completely unreliable and not truthful. The fact of him having received net proceeds of sale of the Yuen Long Property in August 2019 in excess of HK$5 million, coupled with his affordability to purchase the Tai Po Property 4 months later in December 2019 overshadowed his case of unaffordability to continue with paying instalments of the lump sum due to W.
74. Apart from his case of material change of circumstances which I rejected, I also find against H on his case of his own financial status to support his application for discharge and/or variation of the Consent Order.
75. As to H’s submission that he was “misled” by W into signing the Consent Summons, this would only be a reason for seeking appeal rather than a ground for seeking discharge or variation of a Consent Order which had been performed in part and without protest.
76. H’s submission as to the absence of financial disclosure prior to the signing of the Consent Summons was a complete non-starter. Both parties are legally represented at the time and having been fully advised on the right to seek financial disclosure. As a matter of fact, the clause on waiver of seeking financial disclosure was explicitly stated at the very beginning of the Consent Summons under Recital A.
77. W’s submission was that the lump sum of HK$17,000,000 represented the agreed value of all her portfolio and shares in the company “KBTL”. Under Recital J of the Consent Summons, W was required to transfer all her portfolio and shares in the company back to H whereupon also to resign from all positions as director and secretary of the company within 30 days of signing the Consent Summons. W had been done long before she received the full amount of the lump sum. Hence, it would be extremely unfair if H was now allowed to “pay less” (in the case of a variation) or “pay no more” (in the case of a discharge) whilst H had had received and benefited from all her shares and portfolio of “KBTL” back in 2015 (that is, some 9 years ago).
78. I totally agree with W’s submission. Reading the Consent Summons in full and in its proper context, the main purpose of paying W the lump sum was clear and unequivocal and also H had never disputed. In my decision and in line with the established legal principles under the case law, H would only be allowed to discharge or vary the amount of the lump sum if and only if “there was a new event to strike at the heart of the order so as to invalidate the basis, or the fundamental assumption, upon which it was made (see CH v MEH (supra))”.
79. On H’s evidence before me, there was no new event which could be fairly said to have struck at the heart of the Consent Order so as to invalidate it. The change of circumstances that had arisen allegedly was unforeseeable and thereby causing H unable to continue with paying the remaining instalments was, in my decision, clearly self-inflicted.
80. Further, the sum of HK$10,000 a month appeared in the terms of H’s Summons as the suggested amount to be varied for settling the remaining instalments of the lump sum, that is, the 44th (part), 45th to 72nd instalments totalling HK$9,750,000 requires a time span of 975 months (or, say, 81 years and 3 months).
81. At the time of trial, H was aged 59 and W was aged 55. Adding 81 years to the parties’ respective ages at the time of trial, it means when all the remaining lump sum instalments were paid up, H would be 140 (59 + 81) years old and W would be 136 (55 + 81) years old. This is a complete nonsense.
82. I noted with dismay that H’s Summons was drafted by practising lawyers who must always carry out their client’s instructions with diligence, professionalism and common sense. It completely makes no human sense or logic to ask the court to grant instalment schedule which lasts beyond one’s life span. Any such instalment schedule would be thrown out of the window outright.
83. H’s submission in respect of W’s financial status was neither here nor there. Given my finding of the lump sum was agreed by the parties and to be paid by H as consideration for W’s giving up her shares and portfolio in “KBTL’, thus W’s financial status would be completely irrelevant to the topic of variation or discharge of the remaining instalments of the lump sum.
84. Although the Court is entitled to consider the subject matter afresh and de novo, the court must be equally astute to guard against unmeritorious applications for variation by those litigants who have second thoughts about settlement they reached in their own volition (see HCTT v TYYC (supra)). Giving careful consideration to all the evidence, I find H more probable than not fall within such category of litigants.
Decision
85. For all the above reasons, I find H’s application unmeritorious and must be dismissed.
86. And I will so order.
87. As to costs, I decided that it would only be fair and reasonable that it should follow the event. There are no exceptional circumstances for me to consider otherwise.
88. I will accordingly order H to pay W all the costs of his Summons dated 30 June 2022, including all costs reserved, to be taxed if not agreed.
89. I also grant Certificate for Counsel.
90. This is a costs order nisi which would become absolute if no application to vary the same was filed within 14 days from the date of this Judgment.
Judgment Summons/Enforcement
91. With my dismissal of H’s Summons for discharge and/or variation of the Consent Order, I now grant leave to W to restore all her 4 Judgment Summonses for a direction hearing, the date to be fixed before the Listing Officer as soon as practicable.
| (George Own) District Judge |
Mr Derek Hu instructed by Messrs. Ho & Wong, Solicitors for the Petitioner
The Respondent unrepresented, appearing in person
[1] TB:1/50 to 52
[2] TB:1/19 to 26, 31 to 34, 35 to 38, 42 to 45
[3] TB:1/77 (§20 of W’s 2nd Affirmation)
[4] TB:1/85 to 99
[5] TB:1/87 to 91 (§§9-31 of H’s 2nd Affirmation)
[6] TB:1/91 to 94 ((§§32-46 of H’s 2nd Affirmation)
[7] TB:1/94 to 97 (((§§47-60 of H’s 2nd Affirmation)
[8] TB:3/566
[9] TB:1/89 (§21 of H’s 2nd Affirmation)
[10] TB:1/89 to 90 (§23 of H’s 2nd Affirmation)
[11] TB:4/908
[12] TB:1/92 (§§38-39 of H’s 2nd Affirmation)
[13] TB:1/93 (§41(1) of H’s 2nd Affirmation)
[14] TB:1/93 (§41(2) of H’s 2nd Affirmation)
[15] TB:1/93 (§43 of H’s 2nd Affirmation)
[16] TB:1/94 (§45 of H’s 2nd Affirmation)
[17] TB:1/94 (§51 of H’s 2nd Affirmation)
[18] TB:1/95 to 96 (§55 of H’s 2nd Affirmation)
[19] TB:1/96 (§56 of H’s 2nd Affirmation)
[20] TB:1/208 to 209
[21] TB:1/105 (§15 of W’s 6th Affirmation)
[22] TB:1/106 (§16 of W’s 6th Affirmation)
[23] TB:1/106 to 107 (§18 of W’s 6th Affirmation)
[24] TB:3/799
[25] TB:1/107 (§19 of W’s 6th Affirmation)
[26] TB:1/107 to 108 (§21 of W’s 6th Affirmation)
[27] TB:3/746 to 810 (Exhibit “CHM-2-7)
[28] TB:3/789
[29] TB:3/801
[30] TB:3/108 (§22 of W’s 6th Affirmation)
[31] TB:3/108 (§22 of W’s 6th Affirmation)
[32] TB:3/108 (§23 of W’s 6th Affirmation)
[33] TB:3/108 to 109 (§24 of W’s 6th Affirmation)
[34] TB:1/184 to 185
[35] [2008] HKFLR 106
[36] Harris v Harris [2001]1 FLR 68, CA
[37] [2008] HKFLR 286
[38] [2007] 3 HKLRD 819
[39] [2008] HKFLR 286
[40] [1980] AC546 at 559-660
[41] [2001] 1 HKLRD 580
[42] [1979] 10 Fam Law 89
[43] [2002] 1 FLR 166
[44] [2012] 1 HKLRD 751
[45] TB:3/574 to 611
[46] TB:3/582
[47] TB:3/601
[48] TB:2/324
[49] TB:6/2014
[50] TB:3/613
[51] TB:5/1689
[52] TB:1/199
[53] See §26 of this Judgment