Cwh v Csms

CourtFamily Court (Hong Kong)
Judgment Date31 Jul 2018
Neutral Citation[2018] HKFC 123
Judgement NumberFCMC1810/2014
SubjectMatrimonial Causes
FCMC1810/2014 CWH v. CSMS

FCMC 1810 / 2014

[2018] HKFC 123

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1810 OF 2014

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BETWEEN

CWH Petitioner
and
CSMS Respondent

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Coram: His Honour Judge G. Own in Chambers (Not Open to Public)
Date of Hearing: 17 May 2018
Date of Judgment: 31 July 2018

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J U D G M E N T
(Variation of Lump Sum Instalments)

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Introduction

1. This is an application taken out by the Petitioner Husband (“H”) on 7 December 2017 for variation of a Consent Order dated 28 July 2014 (“Consent Order”) following the Respondent’s Wife (“W”) Judgment Summons issued on 28 September 2017 on H’s failure to pay instalments under the Consent Order since April 2016.

2. The Consent Order provides, inter alia, for H to pay W a lump sum of $1,440,000 by way of 8 equal instalments of $180,000 each bi-yearly on 1 April and 1 October each year. The last instalment was agreed to be paid on 1 April 2018, which is a month prior to this trial. Having paid 3 instalments totalling $540,000, H started to default from the instalment due on 1 April 2016 and the subsequent instalments. Thus, under the terms of the Consent Order, the total outstanding amount is $1,440,000 - $540,000 = $900,000 which should have been fully paid up as at the date of this trial had there been no default by H.

3. Due to H’s variation application and in line with the practice, W’s Judgment Summons was adjourned sine die with liberty to restore pending disposal of this application (see C (formerly known as C) v. H[1]).

4. Prior to commencement of this trial, H made an Open Proposal of settling the balance of $900,000 by paying W the sum of $480,000 inclusive of interests within 14 days with no Order as to costs. This was rejected by W with no counter proposals.

5. Both parties are represented by Counsel at this trial. For H’s variation application, W filed her 2nd Affirmation[2] in opposition. W had also raised Questionnaire on H’s Form E which H answered. W through her Counsel confirmed to this Court that W elected not to give oral evidence at the trial. Having been so informed of W’s position, H’s Counsel however had not asked for W to be cross examined on her Affirmation nor had his instructing solicitors filed any notice under Order 38 rule 2(3) of the Rules of High Court to cross examine W. Thus, the trial was proceeded along only with H’s Affirmation evidence and his oral testimonies of which cross examination was conducted by W’s Counsel.

6. There is not much dispute between Counsel as to the applicable law and legal principles on variation of maintenance orders, such as the provision of Section 11(7) of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) and those cardinal cases of AEM v. VFM [3] and HCTT v. TYYC[4].

7. Before going to the merits of H’s application, it is useful to set out the background of the case.

Background

8. The parties were married in December 2009. This is a short and ‘childless’ marriage. H filed his petition for divorce based on the fact of 1-year separation on 18 February 2014. Decree Nisi was granted on 28 July 2014 which was then made absolute on 23 September 2014.

9. Both parties were legally represented at the time when the divorce proceedings were commenced. There is a document by the name “Minute of Agreed Order” dated 6 February 2014 signed by the parties’ respective then lawyers which was filed on the same day when the divorce petition was issued. The contents of such Minute of Agreed Order had also been set forth in H’s divorce petition to be the financial orders sought by H which was then granted as the Consent Order on the date when the Decree Nisi was pronounced.

10. There is no issue that the Minute of Agreed Order and thus the Consent Order is a full and final settlement of the parties’ respective ancillary reliefs on a clean break basis. At the preamble of the Minute of Agreed Order, both parties acknowledged and confirmed that they are aware of their respective legal rights as to disclosure, discovery, and their respective financial position and also rights under the MPPO. Thus, both parties upon legal advice agreed to dispense with disclosure and discovery of documents or otherwise as to their respective incomes and assets.

H’s application for variation

11. H in his Summons sought for the agreed lump sum of HK$1,440,000 set forth in the Consent Order in respect of which there was the balance sum of HK$900,000 be varied to nil or such sum to be adjudged by this Court. H in his Counsel’s Opening Submissions and, indeed proposed openly at this trial, a reduction of the outstanding balance sum from HK$900,000 to HK$468,000. H’s proposed amount of HK$468,000 was worked out by reference to various events which had happened after the Consent Order allegedly leading to a reduction of his income and deterioration of finances[5].

12. H was and is an investment banker by occupation. Between October 2006 and March 2016, he was employed by a leading investment bank X. His last position with X was Executive Director in Asia Pacific Sales & Marketing Department earning an annual salary of HK$2,640,000 plus incentive awards and allotment of Restricted Stock Units (“RSU”)[6]. For the fiscal year 2014/15, his taxable income was HK$4,911,584[7]. H was laid off by Employer X on 31/3/2016. For the final computation of taxable income for 2015/16, it was HK$2,719,979[8] with a tax repayable to H at HK$34,267 out of the provisional tax that he had already paid in the last fiscal year 2014/15[9].

13. Whilst still under employment with X and in 2013, H incorporated 2 companies, namely, IGL and AL for running the business of a Japanese restaurant. IGL was the holding company of its subsidiary AL. When IGL was incorporated, W was also a shareholder whose interest was taken up by H around late 2013 when their marital relationship turned sour. Since then, H became the sole owner and proprietor of both companies. It is H’s case that the Japanese restaurant business was running at a loss since its commencement and eventually ceased business on 30 November 2016. Over the years, he had kept injecting moneys from his salary and compensation income received from X, as well as savings over the years, into the running of the Japanese restaurant hoping to salvage the business. For the year ended 2015 and 2016, the reported financial loss for AL was HK$1,377,993 and HK$2,543,274 respectively. For the parent company IGL, the reported financial losses for these years were HK$1,397,098 and HK$2,562,579[10].

14. Having lost his employment with X for about 11 months, H was only able to find employment with Y on 1/3/2017 as Head of Hong Kong Sales in Global Treasury Department [Rank – Vice President 2] for a fixed monthly salary of HK$150,000 plus 1 month year end salary as annual fixed bonus[11]. Thus, H’s average monthly income was HK$162,500. H testified that with his expertise and experience in the investment bank industry, it is not uncommon to take several months or even up to a year to secure similar positions within the field as there would be extensive and in-depth background and credit check before any offer of employment would be given. For the 11-month of unemployment between 1/4/2016 and 28/2/2017, H spent his time with the running of his Japanese restaurant which turned out to be a failed business venture. Although this was his first time of running a restaurant business, he reckoned that it was more risky and competitive for working in the investment bank that running a business himself.

15. In January 2014, H entered into an Agreement to purchase a property in London, UK for the price of GBP 442,800 which by that time was to be constructed from and between 1 July 2015 to and including 31 December 2015[12]. The purchase was made with mortgage facilities from UOB Bank and the amount outstanding as at H’s updated Form E was around HK$2,680,000. This was and still is an investment property then yielding a rental income of GBP 1,820 a month, which roughly was around HK$19,023 a month (exchange rate of GBP 1 : HK$10.45). The monthly mortgage instalments were around GBP 1,175.16 and GBP 1,208.52[13].

16. Around October 2014, H disposed of his Audi A5 vehicle for HK$250,000 and purchased a brand new Maserati car “Model GhiBli S” for the price of HK$1,330,158[14]. There were also options purchased for the Maserati car at HK$70,115. This Maserati car was purchased under the name of his company AL[15] as the registered owner through hire purchase for HK$1,250,000 with OCBC Wing Hang Bank repayable by 60 instalments at the monthly rate of HK$22,813[16]. H admitted during cross examination that the Maserati car was purchased for his pleasure.

17. In July 2016, H re-married his present wife who is unemployed. There is a child born out of this marriage in August 2016. H and his new family lives in 3 bedroom rented unit (together with car park) in Bel-Air, Cyberport under a renewed 1-year lease at the monthly rental of HK$57,000 since March 2017[17].

18. There are 3 reasons upon which H relied to be a change of his financial circumstances for bringing the present application for variation. They are :-

(a) Loss of employment with X for some 11 months with no income received (“Loss of Employment Reason”);

(b) The failure of his investment in the Japanese restaurant business (“Failed Investment Reason”); and

(c) The financial burden arising from his re-marriage in 2016 and the need to support a child (“Remarriage Reason”)

19. H in his Form E deposed to the following general and personal expenses :-

“4.1 General

Item Amount
Rent 57,000.00
Mortgage instalments
Utilities (electricity, gas,
...

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