SJH v. AMS

FCMC 5963/2016

[2023] HKFC 140

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 5963 OF 2016

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J U D G M E N T
(Committal Proceedings)

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1.  This is the Committal Hearing of the Judgment Debtor who is the Respondent Husband (“H”) following the Examination Hearing which took place on 8 December 2021.

2.  The allegation made by the Petitioner Wife (“W”) is that H has breached a Consent Order made in 2018 (“2018 Consent Order”). H has failed to comply with the following terms:

i.   The Order whereby he is to pay child maintenance at £2000 per month for child of the family, A, which is to be inflation adjusted on an annual basis.  W says that H should be paying £2,453 from May 2022.

ii.   The Undertaking to share equally A’s education costs and related expenses.

iii.  The payment of £34,390 within 12 months of the liquidation of the H’s Savings Plans.

iv.  H’s undertaking to be responsible for the mortgage and costs associated with a London property and to indemnify W of any costs incurred in relation to that property.

Procedural History

3.  H has failed to pay maintenance for A from 1 June 2019.

4.  On 23 June 2020, W took out her first Judgment Summons (“First Judgment Summons”).

5.  On 27 July 2021, W took out her application for an attachment of income order (“AIO Summons”).

6.  On 29 July 2021, H applied to vary the terms of the 2018 Consent Order.  On the return date of his Summons on 30 August 2021, HHJ Melloy gave him leave to file a further summons for Variation of Maintenance and be discharged from previous undertakings; H never acted on this, and nothing was filed.  At the subsequent hearing on 20 September 2021, HHJ Melloy directed the Examination Hearing to take place on 8 December 2021.

7.  On 7 December 2021, W took out her second Judgment Summons (“Second Judgment Summons”).

8.  Subsequent to the Examination hearing, W took out the present Summons for Committal on 20 April 2022, which was then fixed to this current hearing.

9.  The AIO Summons was first heard on 11 October 2022, and following a short adjournment, dealt with by paper disposal on 7 December 2022 (“AIO Judgment”). A number of attachment orders were made:  these include payment of interest on outstanding payments in December 2022 and January 2023, payment of arrears and current payments from February 2023, and for costs from 31 March 2023.

10.  H filed his two Form Es on 23 December 2020 and 16 August 2021 respectively.

Outstanding Amount

11.  It is W’s case that H has ceased maintenance payment since 1 June 2019; and that he has the financial resources at the relevant time and has chosen to pay everyone else but A’s maintenance and schooling.  Furthermore, she says that his present predicament is self-generated.

12.  At the date of this Hearing, it was submitted that the outstanding amounts owed to W are as follows:

	Items	GBP	HKD (@10.20 as at 18/7/2023)
(1)	Outstanding maintenance for A  (inflation factored) -      June 2019 to May 2020 -      June 2020 to December 2022	25,962.48 73,012.62
(2)	School expenses from June 2019 to November 2022	5,108
(3)	School Fees for Summer Term 2018/2019 and Autumn Term	16,500
(4)	Capital Sum owing under Recital L (iii) of the 2018 Order	34,390
		154,973.13	1,580,725.93

13.  The above amounts, with more detailed breakdown, were provided at this Hearing, and was confirmed by H to be the amounts owing.

14.  Despite settlement proposals put forward by W on 10 September 2021, 10 December 2021, and 7 June 2022; she said that H has failed to respond.

Background

15.  Parties married in March 2005.  At the time of this hearing, W is 60, and H is 61.  The child of the family, A, was born in November 2006, and now aged 16.

16.  W petitioned for divorce on 18 May 2016, HHJ Melloy ordered joint custody of A on 24 August 2017, with care and control to W, and reasonable access to H.

17.  W and A relocated to England in August 2017, where A is now studying.

18.  Decree Absolute was granted on 14 June 2018. 

19.  H has a new family in Cambodia, he remarried in November 2018.  According to his Form E of August 2021, his new wife’s income is $1,000 and she has a house valued at $970,000.

20.  At the time of this Hearing, W is the chief executive of a law firm in the UK and H works at a company called OGHKL, but he informed the court that he has just received news that he was terminated.

W’s case

21.  W submits that H’s evidence at the Examination Hearing and under the Attachment of Income proceedings shows that he has or has had since the date of the 2018 Order the means to pay the sums in respect of which he has defaulted; and has refused or neglected to pay such sums.

22.  Her case is further elaborated below.

H’s case

23.  H’s opening submission was not received in time for the hearing.  H attempted to hand it up on the date of the hearing, but was told that it would not be read. 

24.  He chose to give evidence and was cross examined.

25.  H sent in his opening submission to Court three days after the hearing on 19 December; his closing submission is practically a repetition of the points he made in the opening.

26.  His submission asks this Court to dismiss the W’s Committal Summons and allow him sufficient time to make good and satisfy his financial obligations, and to make no Order as to Costs.

27.  He emphasizes that W is a Chief Executive Officer of a law firm in the UK earning a good salary with benefits, that she is fully aware of his dire financial situation and still pursue “oppressively” these proceedings via an international law firm and spent a lot of money on legal fees to do so.

28.  H also said he is not deliberately in contempt, just that he has not been financially able to meet the terms of the Order either because he has no available funds; or the funds he had was necessarily for his own living expenses or to prevent him from “losing his SFC licence”; and that he was not able to secure permanent employment at a level of salary close to his high-paid job back in 2017.

29.  He repeatedly said that he would make good his outstanding payments; and that he would pay when “financially able”. 

30.  As he is in the financial industry, he also said that putting him in prison will cost him his professional licence.

The Law with regard to Civil Contempt

31.  It is trite that the objective behind the law of civil contempt is to ensure that litigants appreciate the importance of complying with orders of the court.

32.  The 3-stage test which summarized the principles set down in the case of Kao Lee & Yip v Koo Hoi Yan (2009) HKCFAR 830 at 846 B-C, are as follows:

a.  The Court has to construe the relevant court order to ascertain its meaning and operation;

b.  Then determine whether the defendant has in fact complied with the Order so construed; and 

c.  Finally, to consider any failure to comply was accompanied by a state of mind necessary to establish punishable contempt.

(Hong Kong Civil Procedure 2023 52/1/16)

33.  In the recent case of Koo Ming Kown v Chan Chi Mong, Hopkins [2020] HKCFI 2827, the Hon Au Yeung J further elaborated at para 16 of the case,

“As to the requisite state of mind in civil contempt, it is not necessary to prove that the alleged contemnor’s conduct was contumacious, i.e. that he directly intended to disobey the order: it is sufficient to prove (a) that he knew the facts which are said to make his act or omission a contempt, and (b) that such act or omission was not accidental Hong Kong Civil Procedure 2021 52/1/17”

34.  W’s counsel also brought my attention to the case of BT v YHK [2020] HKFLR 399, the Court of Appeal decision which endorsed the above principles; and further says that H is this case fits the same comment in head note 4 of the case which reads:

“… the judgment debtor’s inability to repay the W was self-generated as he chose to prioritise his family members and financial creditors over the commitments he had to the W under the 2015 Order.”

H’s access to funds

35.  The relevant period of non-payment for A’s maintenance and education expenses in question is therefore June 2019 to December 2022, over 3 1/2 years.

36.  Counsel for the W made detailed cross-references in her submissions based on the transcript of the Examination Hearing, and W’s 9^th Affidavit (dated 17 March 2022) which summarises the evidence from the transcript, H’s Form Es, and his answers to questionnaires.

Regarding the payment of £34,390 from the Saving Plans

37.  H received three tranches of payment, namely $388,670.52 on 4 June 2018, $865,178.97 on 7 June 2018 and $882,960.80 on 9 July 2018.  This totals $2,136,810.29 which he admitted to come from the liquidation of the Savings Plans, but he never paid W the £34,390 per his undertaking in the 2018 Consent Order.

38.  At the Examination Hearing, he said these monies went to payment of his legal bill for the divorce, W says he did not produce any documentary support to that effect.

Regarding payment for the London Property

39.  On 18 September 2019, H received in his UK account £16,090.  H admitted that this was 12 months of rent for the London Property but made no contribution to the mortgage payment in contravention of his undertaking in the 2018 Consent Order.  W’s counsel quoted from the transcript of the Examination Hearing:

“Court: Sorry, can I just get this right. So you received the rental but you didn’t contribute towards the mortgage at the same period of time.

JD: Um...

Court: Is that your evidence?

JD: I was paying - I believe I was paying some for the mortgage payments, but I don’t know when I ceased making those mortgage payments. I knew during that time...

Court: At this time, so for this period. So this is a 12-month payment in advance, you’ve told us.

JD: Yes. That’s correct.

Court: So from September 2019, for the next 12 months, did you contribute towards the mortgage?

JD: I don’t believe I did, your Honour, no”

40.  This part of his evidence clearly speaks for itself.

Financial resources during the relevant period

41.  Just prior to his default in May 2019, H was receiving deposits into his HSBC account.  On 2 April 2019, there was a deposit of $102,689.39.  He did not recall where this amount came from (but said that he paid out $60,000 to American Express (“AE”) on the same day).

42.  H wrote to W on 23 July 2020 that he received $318,750 from employment by his previous employer PB Partners in the previous year. More specifically, as recorded in the W’s 9^th affidavit, he received from them $100,000 on 3 June 2019, $50,000 on 2 July 2019 and $100,000 on 26 July 2019.  H defaulted in his maintenance payment, W received nothing; while H chose to pay AE $25,000 on each of 5 June 2019 and 30 July 2019 respectively.

43.  H received total deposits of $457,666 between September 2019 and May 2020 into his HSBC account but failed to identify the source of these deposits in his answers to questionnaire.

44.  H received a total of £7,726.97 from consulting work with O’Connell Whiskey, being £4,743.21 on 21 July 2020, £1,482.76 on 25 August 2020, £1,501 on 3 September 2020.

45.  H admitted at the Examination Hearing (December 2021) to having received over $600,000 in income from OGHKL; and failed to pay the W.

Loans

46.  Revealed in his answers to questionnaire and the August 2021 Form E, is H’s receipt of over $1.3 million in loans from 14 personal friends.  These liabilities were not in his November 2020 Form E, which means they were incurred over the nine months in between, and fell into the relevant period of default.  Not only has he not used these monies to pay the W, he has provided no loan documentation in support of these liabilities.

47.  At the Examination Hearing, H confirmed obtaining financial assistance by taking out personal loans with UA Finance of $47,000 on 2 September 2019 and $50,000 on 10 February 2020.

48.  H said he borrowed £28,000 from his mother between 12 December 2018 and 26 May 2020.

49.  The ability to borrow is clearly a financial resources, the above amount totalled ($1.3M + 97,000 + (£28,000 x 10.2)) = $1,682,600.

Employment Income

50.  In the AIO Judgment, DDJ Chow found that H’s then current monthly income was at least USD14,000, being income of USD4,166.67, and pre-paid commission of USD10,000 (equivalent to $108,500) from his employer OGHKL; and his tax return for the financial year 2021/2022 recorded an income of $1,987,616, effectively $91,468 per month.  Despite H saying that the commission portion of his income needed to be paid back to his company, DDJ Chow found that this has never happened.

H’s expenses

51.  Looking at his Form E on 16 August 2021 and excerpt of H’s Statement of Means (filed under the AIO proceedings) reproduced in W’s 9^th Affidavit, his monthly expenses include: his personal expenses of $11,000 for food and household expenses, $8,000 on transport, grooming, meals out, holidays and entertainment; and maintaining private club membership $2,250.  He has failed to provide any documentary evidence in support of, inter alia, his monthly expenses or credit card statements. 

52.  DDJ Chow in her AIO Judgment has found that his monthly expenditures are excessive, I agree.  He does not appear to live like a person who owes children maintenance in excess of $1.5M.

53.  He declared $30,000 of debt repayment with no documentary evidence.

54.  He declared in his August 2021 Form E that he has to pay $25,000 to his dependant family members, this is clearly not the W nor A in these proceedings.

55.  He paid $55,800 for a Rolex watch and a Cartier Engagement Ring for his new wife in Cambodia.

56.  All these at the expense of paying for his son A under the 2018 Consent Order.

Prioritising other payments

57.  H withdrew a total of $191,685.23 from 3 September 2018 to 19 September 2019 and transferred $73,331.18 to third parties from 5 September 2018 to 19 September 2019, he was asked about these amounts in the W’s questionnaire and he was unable to give any explanation as to the purposes of these transactions.

58.  H said in his 2^nd Form E that he is paying USD1,000 to his Cambodian wife to help with her mortgage, and admitted at the Examination Hearing that he prioritised this payment to his obligation under the 2018 Consent Order.

59.  H also admitted to paying USD2,000 per month to his current wife at the Examination Hearing.

60.  He has continued to make payment towards his AE credit card, some of which were mentioned above.

61.  He has continued to pay for his membership and said this club membership is maintained for his son, his business, and his occasional relaxation.

62.  H admitted to paying £1,679 for his gift of a paintball gun for A instead of paying for his school fees.

H failure to disclose information

63.  W produced a table of missing bank statements from First Direct, HSBC and Standard Chartered Bank, and it is clear that the statements produced by him were haphazard, and a number of these are missing from each account. 

64.  He did not explain what happened to $634,392.42 in various online trading accounts, no supporting evidence was ever provided.

65.  W says that H never explained satisfactorily why he was unable to sell his US land valued at USD30,000 collectively.

66.  Sometime during these proceedings, W came across mail addressed to H and received by her which revealed H’s assets with N Wine. This was never disclosed, but since this came to light, she has received the amount of £998.52 on 17 November 2022 from the liquidation of these assets.

67.  At numerous times over the Examination Hearing, he repeated that he has not been able to make proper disclosure because his documents are “in storage”, when asked why he could not retrieve it, he said he was in Cambodia, and when back in Hong Kong, he said it is too costly to do so.  He says at the Examination Hearing that it didn’t strike him as necessary, and then at the Committal Hearing he said it was “impractical” to do so.  He also said at the Committal Hearing that “it costs me over $10,000 to access the storage area and have it unpacked. I don’t have the spare money.” W’s counsel says that it was a further affront that H does not make payment to W yet continues to incur monthly storage charge of $10,000.  This is another factor in respect of him prioritizing other payments.

68.  W’s counsel also submits that H had in July 2022 sought extension of time for filing his affidavit on the pretext of waiting for supporting documents from HSBC. When his affidavit was eventually filed, and despite having 2 ½ months to complete his affidavit in August 2022 to complete his affidavit in opposition, he still failed to provide supporting documentation, which to date remained unavailable.

69.  H has failed to make full disclosure at the examination hearing, on HHJ Melloy’s questions, he said he would, but continued in his failure to do so up to the time of the Committal Hearing.  This is best summarized by referring to W’s counsel submission:

“As stated, the JD did not provide proper disclosure even at the Examination Hearing. The JD’s Answers to the JC’s Questionnaires were extremely lacking. The JD has failed to provide proper supporting documentation relating to inter alia, his living expenses, personal loans of over HK$1.3 million, his assets of $1,047,526.50 disclosed in his 1^st and 2^nd Form E, proof of sale of shares, proof of multiple debts the JD alleges having paid. A year later JD has still not properly accounted for the defects in his disclosure.”

70.  As close to the Committal Hearing as 8 December 2022, W wrote to H for updates regarding his Pensions; no supporting documents were produced up to the time of this Hearing.

H’s allegation about his employment

71.  H started working at OGHKL from 1 June 2021.  As stated above, his income is close to $100,000 per month.

72.  At this Committal Hearing, it came to light that H said that he has been terminated from his job, and that he would be replaced. He said he heard this 3 weeks before the Committal but only produced a letter from his Employer dated 15 December 2022 after the Committal hearing in January 2023.  The letter says that as part of the company’s “continued development in Asia”, H’s role will cease on 14 December 2022; that they are working out the transition for H, and the package to be discussed will only related to a limited role for H. 

73.  Together with the H’s closing submission is an email from his employer dated 30 January 2023 that H’s last working day was 28 February 2023.

74.  In W’s closing submission, she says that this development happened shortly after the AIO Judgment was handed down, and is clearly yet another attempt on the H’s part to avoid the AIO.  Despite the said Order, no payments has been made thereunder as at January 2023.

75.  As a result of his employment situation, DDJ Chow had to discharge the AIO by her order of 15 June 2023. The AIO summons and proceedings thereafter had been rendered nugatory.

Conclusion

76.  The case law is clear that it is not about H’s intention to disobey the Order or not.  The part of the Order which were in default is clear, H agrees to the outstanding amounts at this Committal Hearing, his default is not accidental.

77.  Drawing from the evidence before me, it is also clear that prove W has proven her case beyond reasonable doubt. 

Sentencing

78.  I will turn to the sentencing hereinbelow.

79.  I invited H to make his submission on mitigation. He said that he had made a round of payment after the Committal Hearing, of approximately £15,000. He then said he will pay when he has the opportunity to pay. W’s counsel confirmed the only one-off payment was £13,538, being in part for outstanding arrears and also school fees for A.

The principles on sentencing

80.  The relevant sentencing principles have been summarised in Bruno Arboit as sole liquidator of Highfit Development Co Ltd v Koo Siu Ying (No 2)[2016] 3 HKLRD 154 at §§2 to 8, Au-Yeung J:

“2. The starting point is to acknowledge that contempt of civil court orders is a serious matter and that court orders are made to be obeyed. A prime consideration of the court in sentencing contempt is to ‘signal importance of demonstrating to litigants that the orders of these courts are to be obeyed’. By ‘litigants’, it is clearly referring to litigants in general and not just the contemnor himself.

3. The object of the sentence is both to punish conduct in defiance of the court’s order and to serve a coercive function by holding out the threat of future punishment as a means of securing the protection which the order was primarily there to do. … The court has to balance the 2 objects.

4. The sentence for contempt may range from a fine to a term of imprisonment. The UK Contempt of Court Act 1981 imposes a maximum term of 2 years’ imprisonment but Hong Kong does not have that statutory limit.

5. Imprisonment should be regarded as a sanction of the last resort. Any custodial sentence should be as short as possible consistent with the circumstances of the case.

6. The court may suspend a term of imprisonment for such period or on such terms as the court deems fit: … Order 52, rule 7. This is an “absolute discretion” but it would be difficult to think of circumstances where a suspended order should be made when nothing further remains to be done to comply with the order.

7. The court will consider if there are:

(a) Aggravating factors;

(b) Mitigating factors; and

(c) Acts to purge the contempt.

8. Relevant factors (which are not exhaustive) include:

(a) The nature of the order and breach in question, and the extent of the breach.

(b) Whether the contempt was contumacious or unintentional, the reasons, motives and state of mind.

(c) Whether the claimant has been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy.

(d) Whether the contemnor appreciates the seriousness of the deliberate breach.

(e)  Whether the contemnor has cooperated.”

81.  In this case, Hon Au Yeung J continued to say that:

“The Court should examine the context in which the contempt had arisen, the effect of the breach on the Applicant, the aggravating factors, the mitigating factors and the personal circumstances of the respondent.”

82.  I have analysed above the context in which the contempt has arisen.  H has been in default over 3 ½ years. While H kept saying that he intends to pay when able, he proffered no plans on how he intends to do this.  He has not even made an attempt to purge his contempt since the Examination Hearing, nor come to the table for a discussion on the M’s settlement offers.

83.  W’s counsel also made submission in her closing as to H’s contradictions and inconsistencies with reference to his affidavit evidence, his answers to questionnaires, and his responses at the Examination Hearing.  There is no need to list these out in details at this point, except to say that these are accepted as they are all backed by evidence before the Court.

84.  The fact that he has chosen to pay his new wife and for her family USD3,000 instead of the amount owed on his monthly maintenance to A and his school fees is unacceptable.  He chose to believe that because M has the ability to support their son, that he can put on very low priority his financial responsibilities as a father and flout an Order of this Court; such conduct must not be endorsed.

85.  He has also failed miserably in his on-going duty for full and frank disclosure to this Court, his excuses in this failure are not accepted.

86.  W’s counsel submits that it is ironic that H thought not paying his AE and HSBC liabilities would cost him his licence.  I am of the view that he is fully aware of the consequence of his default under the 2018 Consent Order and these enforcement proceedings.  He appears to operate on the belief that there will be no consequences nor repercussions for his breaches.

87.  The H is hereby committed to prison for a term of three months. Upon payment of the whole of the judgment debt in the sum of $1,580,725.93, the Chief Bailiff or the Commissioner of Correctional Services, as the case may be, is directed to release the judgment debtor forthwith.

Costs

88.  W seeks costs on an indemnity basis.  The legal principles are trite, inter alia, the Court is entitled to look at the circumstances upon which these proceedings are taken out, conduct of the Respondent prior to and during these proceedings.

89.  W’s ask are based on the following:

a.  W has been forced to institute proceedings against H for his ongoing breach of the 2018 Consent Order.

b.  H has on-going failed to make any substantive payments towards the arrears or ongoing maintenance despite his income for over a year.

c.  H has delayed these proceedings by seeking a variation of maintenance application but failed to follow through, applying for legal aid one day before the examination hearing, refusing to accept service of committal summons and documents whereupon W has to seek dispensation from Court, opposing the AIO Summons 14 months after it was filed, seeking extension of time to file an affidavit on the pretext of gathering documents for disclosure but failing to produce them in the end.

d.  No genuine attempts to settle despite efforts by the W.

90.  I accept these points, and further take into regard the following conduct:

a.  H’s non-compliance of a Court Order.

b.  H’s continuous failure in full and frank disclosure.

c.  H’s decision in prioritizing payments for his new family, his credit card bills, his excessive expenses over paying for his son’s maintenance and education.

91.  I make an Order that the Costs of these proceedings be to the W, on an indemnity basis.  This to be a cost nisi to be made absolute 14 days hereof.

92.  The H's application for variation of maintenance dated 29 July 2021 shall be dismissed.

FCMC 5963/2016

[2022] HKFC 266

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 5963 OF 2016

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JUDGMENT

(Attachment of Income Order)

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Introduction

1.  This is an application taken out by the petitioner (“the wife”) by way of a summons filed on 27 July 2021 for an attachment of income order (“the AIO”) with respect to the amount of maintenance paid pursuant to an consent order dated 24 May 2018 (“the 2018 consent order”).  Whilst the wife is facing arrears of maintenance, she now seeks this be secured by an attachment of income order, the respondent (“the husband”) opposed.

Background

2.  Both parties settled their ancillary relief issues in the 2018 consent order, the wife says the husband is and was in breach of the order and is seeking the following sum to be attached, inter alia:

(i)     paragraph 3: The husband’s arrears of maintenance for the child from 1 June 2019 to 1 July 2021 in the amount of GBP58,983, to be paid to the wife with surcharge to be assessed.

(ii)   paragraph 3: The husband’s current maintenance for the child from 1 August 2021 onwards at GBP2,000 per month, to be increased to GBP2,200 per month upon the respondent commencing employment, be paid to the wife until the child attains 18 at which the maintenance shall be reviewed.

(iii)  Recital N: The husband’s current payment towards the child’s school fees by paying directly to [name of school] or any other educational establishment up to the conclusion of his tertiary education;

(iv)  Recital N: The husband’s arrears of payment towards the child’s education costs in the amount of GBP19,528 to be paid to the wife together with interest and surcharge to be assessed;

(v)   Recital L(iii): The husband’s arrears of payments in the sum of GBP34,390 being an amount realized from two trust funds to the wife with interest and surcharge to be assessed.

(vi)  Recital J(ii): The husband’s arrears of payment that he undertook to be responsible for all costs associated with a property in the United Kingdom and to indemnify the wife of any costs.

3.  It is worth to note the proceedings prior to this application. The wife has taken out two separate judgment summonses on 23 June 2020 and 7 December 2021 in respect of arrears of the above.  In between, on 27 July 2021, the wife took out this AIO application.  Two days later, on 29 July 2021, the husband applied to vary the terms of the 2018 consent order (Form 8 filed).  In the said Form 8, the husband is seeking to vary (i) to pay the wife nominal maintenance only; (ii) equal share of the child’s school fees up to his tertiary education; and (iii) payment of lump sum GBP34,390 pursuant Recital L (iii) be discharged; and (iv) costs of and liability of a landed property in United Kingdom be discharged.  The husband’s Form 8 was heard on 30 August 2021 before HHJ Melloy of which was adjourned to 20 September 2022 with an order to granting leave to the husband “to file a further summons or Notice of Application for Ancillary Relief seeking variation of maintenance and/or to be discharged or released from his previous undertakings as appropriate”.  It seems the husband had not filed anything subsequent to the order dated 30 August 2021.  On 20 September 2021, no further order was given in respect of Form 8, save and except, inter alia, an order that the hearing of examination was ordered to proceed on 8 December 2021.

4.  During the examination, as I can see from the transcript[1], HHJ Melloy was expecting the wife and the husband to proceed with both the variation of maintenance and committal proceedings in the future.  After the examination hearing, the wife then took out a summons for committal on 20 April 2022 in which the substantive hearing for committal is fixed to be heard on 16 December 2022.  In other words, as at the hearing before me, the husband’s Form 8 was left in abeyance.

5.  In opposing this application, the husband filed his Statement of Means (Form 1) on 16 August 2021; an order to the income source to verify the contents of Statement of Means was made on 16 December 2021; and finally, the Statement of Verification by the income source had come on 29 July 2022. The hearing of AIO was first heard before me on 11 October 2022, I granted a short adjournment to 13 October 2022 for the parties to make clarification and to give some room for them to negotiate.  The husband proposed only to accept HK$15,000 out of his salary to be attached.  The wife refused to settle.  To avoid further hearings, I so ordered the application to be disposed on paper.

The law

6.  The power to order an attachment to income is premised on section 28(1) of the MPPO, which reads,

“Section 28(1) of MPPO provides that:-

Where a maintenance order has been made against a maintenance payer and-

(a) (i) a court is satisfied that the payer has without reasonable excuse failed to make any payment which he is required to make by the maintenance order; or

(ii) a court is satisfied that there are reasonable grounds to believe that the payer will not make full and punctual payment in compliance with the maintenance order; or

(iii) the payer and designated payee agree to the making of an order under this section; and

(b) there is any income capable of being attached payable to the payer,

the court may, in accordance with rules made for the purpose of subsection (6), order the income to be attached as to the whole or part of the amount payable under the maintenance order and the amount attached to be paid to the specified payee.”

7.  Section 28(1A) of MPPO provides that,

“For the purpose of subsection (1)(a)(ii), in deciding whether there are reasonable grounds to believe that the maintenance payer will not make full and punctual payment in compliance with the maintenance order, the court shall take into account all the circumstances of the case, including (but not limited to)-

(a) the payer's past record and conduct in discharging his reasonable financial obligation towards the designated payee before any maintenance order is made;

(b) the payer's past record and conduct in connection with the making of maintenance payments to the payee pursuant to the maintenance order or an undertaking in any proceedings; and

(c) the risk of the payer dissipating his property.

8.  Section 28(3B) of the MPPO provides that,

“An attachment order may be made by the court on its own motion or on the application by the maintenance payer or the designated payee or both.”

Further, Rule 13 of the Attachment of Income Rules, Cap 13A provides:-

The court may-

(a) dispense with or relax any procedure specified in rules 3 to 8; or

(b) abridge any time limit specified in rules 3 to 8,

if the court is satisfied that it is fair and reasonable to do so in the circumstances of the case.”

9.  In a Court of Appeal case, CWYJ v. LTYE (CACV 481 of 2020, [2020] HKCA 913), Hon Cheung JA confirmed the decision to make an order of income attachment in the Family Court, the relevant paragraphs appeared as:

“9.26 The Respondent had proposed that he would provide an undertaking that he would not oppose any attachment of income application by the Petitioner in Singapore, subject to provision of his reasonable living expenses. It is common ground that a Hong Kong Family Court order can be enforced against the Respondent in Singapore.

9.27 Judge M Lam held that there was no concrete proposal or figures suggested by the Respondent, further in view of the payment history and the past conduct of the Respondent it is understandable that the Petitioner would be cautious about any such general suggestion and be loath to be burdened with additional costs of commencing another set of proceedings in Singapore. She further held that her invitation for the Respondent to materialise the terms of the attachment of income suggestion and to explore feasible solutions as direct payments from his employer met with no success. It is difficult to see how the Petitioner would be able to design a feasible plan with the limited information disclosed by the Respondent and his past conduct in departing from his undertakings.

9.28 We disagreed with the Respondent’s submission that the judge was wrong to reject his offer on income attachment.  Additional costs to be incurred by the Petitioner in applying for the income attachment order is obviously a relevant consideration, particularly when it is intended to be enforced overseas.  In our view, instead of requiring the Petitioner to pursue this remedy, the initiative should come from the Respondent himself, for example, by direct periodical payment of a realistic amount from his bank account to the Petitioner.  As the matter now stands the Respondent had only started to pay $5,000 each month to the Petitioner since September 2020.  At this rate, as the Petitioner submitted, it will take 66 years to repay the balance of the lump sum of $3,989,647.95 ($4 million less the recent payment of $10,352.05).”

10.  In short, in exercising the discretion to order an income attachment order, the Court will canvass the proposal from the maintenance payer in light of the manner of settlement of arrears of maintenance (or ongoing maintenance), the content of which shall be considered with the payment history and past conduct of the maintenance payer.  The Court also expects the maintenance payer to take initiative to remedy his or her breach.  If the Court found the offer or proposal of the maintenance payer is unrealistic and when the designated payee is unable to design a feasible plan, the Court is entitled to reject the offer of the maintenance payer.

Discussion

11.  The issue is whether the Court shall exercise discretion to order an attachment of income order against the husband.

12.  The wife stated the husband had been unemployed since May 2017, he was able to adhere to the terms of the 2018 consent order until March 2019.  In between, the husband was able to secure a job in the equity field, unfortunately it had ended on May 2022.  The last child maintenance paid to the wife was on 29 May 2019, subsequent to this, the payment of the child’s education costs was also stopped in June 2019.

13.  The wife says the attachment of income order is crucial given the husband has a history of irregular and inadequate payment.  She says that the husband did not pay her as ordered in the 2018 consent order notwithstanding he has commenced with an employment as a managing director with a Hong Kong company, trading in equity, from 1 June 2021, which is two years since the default of the payment.  Not only this, the husband has defaulted paying the wife the agreed GBP34,390 by saying most of the funds obtained from the realization of the trust funds was applied to the legal costs of the matrimonial proceedings.

14.  On the other hand, the husband admitted he was staying with his new wife in Cambodia prior to his commencement of his new job in June 2021. With a view to obtain a gainful employment, the husband had retuned in town. The husband filed his updated Form E on 16 August 2021 in that he had made clear of his current income with the equity company, being some USD14,000 was comprised of (i) net income of USD4,166.67 & (ii) pre-paid commission of USD10,000. Should he had failed to generate sufficient profit or business gets traction, the company will seek repayment of the commission.  This saying is well supported by his employment contract of which I accept this is the true.  The husband has been working with the same company and was being paid at a sum around USD14,000.  The employer’s tax return for the financial year 2021 – 2022 recorded an income of HK$1,097,616. At the hearing on 13 October 2022, he confirmed no request was made by the company to repay the pre-paid commission but this arrangement will be subjected to review on a monthly basis.

15.  The Court is coupled with a discretionary power to grant an income attachment order on whole or part of the amount payable under the maintenance order.  In deciding whether to exercise such power, the Court has to satisfy, (i) the husband has without reasonable excuse failed to make any payment which he is required to make by the 2018 consent order; or (ii) there are reasonable grounds to believe that the husband will not make full and punctual payment in compliance with the 2018 consent order thereafter.  For the purpose of limb (ii), the Court shall take into account all circumstance of the case, the husband’s past record and conduct in both discharging his reasonable financial obligation towards the wife before the 2018 consent order is made; and in connection with the making of payments to the wife.  Apart from that, the Court shall also see if there is risk of dissipation of assets.

Whether the husband has without reasonable excuse failed to make any payment with he is required to make by the consent order?

16.  When the wife set out a case on non-compliance of the 2018 consent order, the husband attempted to say he has reasonable excuse to have failed to make payments.  The husband was well prepared with his variation of maintenance by filing an updated Form E on 16 August 2021 together with an affirmation to explain his financial position.

17.  The husband explained in detail in his affidavit filed on 29 July 2021 that he had no further ability to fulfil the 2018 consent order.

18.  The husband was unemployed at time of the 2018 consent order, he has made his best endeavour to secure an employment since then but only HK$300,000 plus a small commission was earned.  The husband explained in his affidavit filed on 27 August 2021 that he has spent 16 months in Cambodia with his new wife because he could not have afforded an accommodation in Hong Kong.  He was unable to bring the variation application earlier because he was locked down in Cambodia with no laptops and no records.

19.  The husband further explained, since commencing his new job in June 2021, he was paid USD4,166.67 per month together with a pre-paid commission of USD10,000.  To sustain his license as a stockbroker and to avoid turning into a bankrupt, he had deployed his 1^st two months’ salary, approximately HK$50,000, to repay his debts to the bank, loan company and credit card so as to avoid turning into a bankrupt.

20.  The husband’s explanation is not accepted. Although the husband has yet to proceed with his variation of maintenance application, it does not serve as a reason to stifle the wife’s AIO order.  The husband could have revived the said application at any time and that the AIO order can be varied accordingly.

Are there reasonable grounds to believe that the husband will not make full and punctual payment in compliance with the consent order?

21.  The answer is yes. The husband has applied to vary the terms of the 2018 consent order on ground of financial difficulty.  It is expected full and punctual payment is implausible.

Is there risk of dissipating assets on the part of the husband?

22.  The answer is yes, the issue in question is his monthly income.

The husband’s proposal

23.  Notwithstanding the above, the husband conceded to the AIO application on condition that only HK$15,000 be attached.  The wife refused to accept.

24.  In YY v. CHOA (FCMC 7598 of 2010), the designated payee applied for the same order where HHJ Melloy accepted the maintenance payer’s valid concern of triggering his employer’s attention and will affect his job security.  The maintenance payer offered an undertaking to set a direct debit authorization to enable maintenance to be paid from his savings account to the designated payee’s account.  Of course, in this case, the husband agreed to pay maintenance in full as opposed to the husband whom have offered a substantially lower sum of maintenance to be paid every month.  I see the reason why the wife was unable to concede the husband’s proposal and I agree the sum offered is on the low side.

25.  The husband explained, it is part of the employment contract that he has to return the commission to his employer when insufficient profit was generated.  As at the date of hearing, nothing was put into action.  The husband is still having more than HK$100,000 monthly salary.  In this regard, I share same view with the wife that the husband’s proposal to attach HK$15,000 against his income is unrealistic, no feasible plan has been suggested. The husband’s proposal shall be declined and an income attachment order is justified.  I therefore exercise my discretion to make an order that the maintenance and those other items shall be secured by an IAO.

What amount to be attached?

26.  The next step is to assess a reasonable sum to be attached to the order. The husband stated in his Form 1 with his monthly expenditures. I agree with the wife that his expenditures have somehow prevaricated the compliance of the 2018 consent order by prioritizing other spending other than making prompt maintenance payments to the wife, for instance, monthly spending on food HK$11,000; grooming, meal out, entertainment and holiday at a sum of HK$11,000 and keeping a private club membership of HK$2,250. I find the husband’s monthly expenditures are excessive.

27.  The wife has submitted her draft order which contained in paragraphs (1) to (3) with the amount to be attached. I accept they are reasonable.

Costs

28.  In respect of paragraph 4, regarding costs of the wife’s summons, she is seeking HK$298,259 as her costs on indemnity basis against the husband. When costs order being discretionary, I do not agree the costs of the wife’s application shall be made order on an indemnity basis for reason that the husband’s conduct, although in defaulting of paying maintenance pursuant to the 2018 consent order, his conduct may not be as serious as scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive or in an oppressive manner. To save parties’ costs on taxation, I shall embark on summary assessment on costs, up to 13 October 2022 (the 2^nd hearing of the AIO), including all reserved cost of the wife’s summons, as follows[2]:

(i)	Part B: manual work	HK$ 5,950
(ii)	Part C: communications	HK$ 71,204
(iii)	Part D: Professional work:	HK$114,117.85
(iv)	Part E: Counsel:	HK$ 20,500
(v)	Part F: disbursement:	HK$1,114
		HK212,885.85

Orders

29.  With reasons of the foregoing, I grant an attachment of income order as per the draft order submitted by the wife on 27 October 2022 with her written submissions save and except for amendment of such terms appeared hereinbelow:

…

“(1) The sums of GBP4,838.92 and GBP4,700 (or USD/HKD equivalent on the date of transfer) being interest as referred to in rule(3)(2)(f)(iii) of the Attachment of Income Order Rules (Cap 13 sub. leg. A) to be paid on 31 December 2022 and 31 January 2023.

(2) The sum of GBP4,000 per month (or USD/HKD equivalent on the date of transfer) for 38 consecutive months and a final payment of GBP3,094 (or USD/HKD equivalent on the date of transfer) in respect of arrears of payments under the maintenance order first mentioned to be paid from 28 February 2023.

(3) The sum of GBP500 per month (or USD/HKD equivalent on the date of transfer) in respect of current payments under the maintenance order first mentioned to be paid from 28 February 2023.

(4) The sum of HK$4,000 per month for 53 consecutive months and a final payment of HK885.85 in respect of costs in connection with the wife’s summons filed on 27 July 2021 including all costs reserved to be paid from 31 March 2023.

……

This Order shall be effective for the period from 31 December 2022 until further order.”

FCMC 5963 / 2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 5963 OF 2016

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JUDGMENT
(Interim Maintenance)

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Introduction

1.  This is an application by a petitioner mother for interim maintenance for the only child of the family, A, pursuant to section 5 Matrimonial Proceedings and Property Ordinance Cap 192. The mother does not seek maintenance pending suit for herself. However, she did originally seek an order backdating the maintenance for the child plus other extraneous payments. In the mother’s summons dated the 31 May she set out her claim as follows:

1.   The Respondent do forthwith pay to the Petitioner interim maintenance for the benefit of the child of the family, namely, AJS, a boy, born on XX November 2006 (“A”) at the rate of HK$31,017 per month or another amount as this Honourable Court deems fit until further Order and such maintenance to be backdated to July 2016;

2.   The Respondent do pay forthwith to the Petitioner the sum of HK$50,000 as reimbursement of costs incurred as a result of the Petitioner and A moving out of the Former Matrimonial Home in July 2016;

3.   The Respondent do pay forthwith to the Petitioner the sum of HK$48,000 being 50% of the deposit on the Former Matrimonial Home retained by the Respondent;

4.   The Respondent do pay forthwith the outstanding X School Fees;

2.  The mother’s application for interim maintenance was made on the 31 May 2017 and was done in anticipation of a fully litigated trial on relocation. The mother wished to return to the United Kingdom with A and the father initially resisted that application. Sensibly the parties were eventually able to compromise this issue. Consequently, the mother and A left Hong Kong for the UK shortly after the date of this hearing.

3.  In so far as this application is concerned the immediate difficulty is that neither party had a job as at the date of the hearing. Both parties have historically enjoyed good incomes, the father in the finance industry and the mother as a marketing and business development professional. However, the mother had resigned from her position in anticipation of the relocation and she said at the hearing that her intention was not to work initially in the UK, as her priority was to settle A. It is her intention to return to work in due course. The father for his part was made redundant on the 31 May 2017. I was told that he was looking for another job, but nothing had yet been confirmed.  

4.  Consequently both parties put forward slightly different but nonetheless pragmatic proposals, with a view to ensuring that each had funds available to them in the immediate to short term. These will be set out below. 

Background

5.  The parties married on the XX March 2005 and the mother moved out of the former matrimonial home with A on the 2 July 2016. Shortly prior to that the mother had issued divorce proceedings based on mild unreasonable behaviour particulars. The divorce petition is dated the 18 May 2016. The decree nisi was granted on the 16 August 2016. There is one child of the family, A, a boy who was born on the XX November 2006 and who will therefore shortly be 11 years of age.

6.  There have been a number of issues that have caused the parties to come to court on a fairly regular basis seeking assistance, with particular reference to access and the father’s alleged problems with alcohol. I do not intend to go into any of those issues here.

The law

7.  Applications of this nature are governed by section 5 Matrimonial Proceedings and Property Ordinance Cap 192 which states that the court may make orders requiring one party in a marriage to pay maintenance to the other, for the benefit of the children of the marriage:

“(a) before or on granting the decree of divorce …… or at any time thereafter”

8.  The only governing principle is that the court will make such order, as it considers reasonable.  Thus interim maintenance for a child is approached in exactly the same way as maintenance pending suit for adults.  Consequently, again, and as each side rightly acknowledges, applications such as this are approached on a broad-brush basis.  A detailed examination of the parties’ means will be left to a later date at a full ancillary relief hearing, that is, if there is no agreement in the meantime. Any over or under payment may be dealt with then.

9.  Regarding the principles that under pin an application such as this, paragraph 16.17 of Rayden, 18th edition, is also of some assistance:

“The court has an unfettered discretion to award such sum as it thinks reasonable. There is no hard and fast rule, and no fixed proportion: each case depends on its own facts. It has been said that the approach to maintenance pending suit should empirical, and that ‘in the ordinary sort of case the district judges who deal with these applications will have to take a broad view of means on the one hand and income on the other and come to a rough and ready conclusion, or to take a ‘broad brush approach’’. The overall consideration is the actual needs of the parties’ pending suit”.

Proposals

General

10.  The parties own a number of insurance/savings plans and it appears to be agreed that the Generali policy no #9XXXXXXX, which matures in December 2017 in any event, shall be liquidated with immediate effect. The parties differ on how these monies shall be utilized.

Mother’s proposal

11.  The mother proposes that the sum of GBP30,000 be put to one side from this fund in order to cover A’s school fees and related expenses for the next academic year and that this be accounted for. She also proposes that the outstanding amounts due to X be paid in the sum of approximately HK$185,000. The father removed the sum of GBP30,000 from a further savings account. The mother asks that a balancing sum of GBP30,000 be paid to her first and that a further sum of HK$90,000 being the rental deposit of the former matrimonial home also be paid to her. Thereafter she proposes that the balance should be split.

12.  In so far as maintenance for A is concerned, she originally proposed that the father contribute HK$31,017 per month, based on the Hong Kong estimates found in her Form E. In her counsel’s submission she subsequently suggested that he contribute GBP2,000 per month. In the event that the husband is not working she proposed that he contribute that sum from his share of the proceeds from the Generali fund. It was also suggested that both parties keep a record of how these funds are utilized generally and not only with reference to A’s school fees and related expenses.

13.  The mother also originally sought an order for the backdating of maintenance to July 2016, which is when she moved out of the former matrimonial home with A, based on the figure of HK$31,017 per month.  

Father’s proposal

14.  The father also proposed that the Generali fund be liquidated. He proposed paying from that:

a) A’s school fees for the next academic year;

b) the school bus fees;

c) the school uniform;

d) Agreed Extra-Curricular Activities; and

e) the monies due to X in the sum of approximately HK$185,000.

15.  In so far as A’s maintenance is concerned he proposed paying GBP1,400 per month. He also argued that the maintenance should not be backdated and that this issue should be considered at the final hearing/Financial Dispute Resolution hearing in the event that agreement cannot be reached in the meantime. He also proposed that the parties each receive HK$200,000 each and that the remainder of the funds from the Generali policy be held pending either final agreement or court order.    

Discussion

16.  There are a number of issues in this case which will need to be determined at a later date. In particular, the mother is claiming that the father has dissipated joint income and that he has spent excessively on bars in Hong Kong. She will be asking that these sums be “added back” later. The father for his part accuses the mother of deliberately making herself illiquid and appears to be putting forward a case on financial misconduct. Given that and the present financial situation of the parties I accept that it would be sensible to put the issue of the backdating of the maintenance for A to one side so that this issue may likewise be considered fully at a later stage in the proceedings.

17.  In so far as the Generali policy is concerned I accept that this should be liquidated with immediate effect. The current value is estimated at GBP233,500. Of that sum I agree that GBP30,000 should be put to one side for A’s school fees, school bus fees, school uniform and agreed ECA’s. It is directed that this sum shall be forwarded to the mother so that she is able to meet these expenses for A for the next academic year. The mother shall keep an account of how these funds are spent.

18.  In so far as X’s outstanding school fees are concerned, although there may be an argument about who is responsible for each part of the outstanding sum due, I agree that on a broad brush basis it would be sensible to ensure that this sum is also paid. It is noted that the parties have agreed to this in any event. Consequently, it is also directed that the sum of approximately HK$185,000 be paid to X from the Generali fund.

19.  I also accept that the mother should receive in addition the sum of GBP30,000 from this fund and thereafter that the remainder be split between the parties on a 50:50 basis. This should provide each party with a financial cushion pending the FDR hearing in the first instance. A direction to this effect is to be included in the court order. It seems to me that this option is preferable to the father’s alternative proposal which might have meant that the mother was left with no visible means of support once the HK$200,000 had been spent.   

20.  In so far as the maintenance for A is concerned, I accept that the mother was only able to provide a very rough estimate of her anticipated expenses in the United Kingdom. I will though expect her to keep a detailed record going forward. Generally speaking, I accept the figures that have been provided are reasonable and I was concerned by the father’s attempts to cut some of these down. For example, the suggestion that the mother would only be paying GBP375 per month on food seemed a little unlikely. Consequently, I will accept the mother’s proposal that the father contribute GBP2,000 per month towards A’s costs with effect from the 1 September 2017.    

Costs

21.  I can see no reason why costs should not follow the event in this instance. The mother appears to have had no alternative but to make an application to the court and although she has not achieved everything that she initially sought, she has been largely successful overall. I shall therefore make an order nisi that the father do pay the costs of and occasioned by this application on a party and party basis to be taxed if not agreed such order to be made absolute in 14 days’ time.

22.  Given the above I will therefore make an order as follows:

1)   The Respondent father shall pay the Petitioner mother interim maintenance for the child of the family in the sum of GBP2,000 per month the first payment to be backdated to the 1^st September 2017 and thereafter to be paid on the first day of each succeeding month until further order.

2)   There shall be an order nisi that the father do pay the mother’s costs of and occasioned by this application to be taxed if not agreed on a party and party basis, to be made absolute in 14 days’ time.

23.  It is further directed that the Generali policy no #9XXXXXXX be liquidated with immediate effect and that payments be made from those funds as set out above.