HKFC 20
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
NUMBER 664 OF 2016
Coram: His Honour Judge K K PANG in Chambers (Not open to public)
Date of Hearing : 30 December 2019
Date of Handing down of Judgment : 17 January 2020
J U D G M E N T
(Variation of maintenance)
1. I refer to the Petitioner wife as ‘the Mother’ and the Respondent husband as ‘the Father’ respectively.
2. This is the trial of the Father’s summons dated 4 July 2019 for variation down of maintenance payment for the Mother and the twin daughters of the family, now aged 7 (‘the children of the family’).
3. The Father, businessman, now aged 58, was born and brought up in the Netherlands. The Mother, housewife, now aged 48, was born and brought up in Hong Kong. In 2010, the parties were married in the Netherlands. In 2011, the Father moved to HK and set up a local company here. In August 2012, the Mother gave birth to the children of the family in the Netherlands. Unhappy differences arose between the parties and they were separated in 2014. After having made significant losses and lost the full investments, the Father closed down his local business and moved back to the Netherlands in 2015. The Mother filed the Petition for divorce on the ground of unreasonable behaviour in January 2016. On 8 April 2016, the Decree Nisi was pronounced.
4. On 27 October 2016, upon the Father’s undertaking:
(i) To purchase and maintain a life insurance policy with an insured sum of €1,000,000 payable upon his death to each of the children of the family in equal shares;
(ii) To make necessary arrangements to ensure that in the event of his death, the children of the family shall each have €20,000 each year payable by monthly instalments before they reach the age of 23 in the form of a Will; and
(iii) To review the present level of maintenance to the Mother and the children if he is able to earn more money,
BY CONSENT an order was made as follows:
(a) The Father shall pay the monthly sum of HKD5,000 as maintenance pending suit for the Mother and such maintenance pending suit becomes final upon pronouncement of the Decree Absolute;
(b) The Father shall pay the monthly sum of HKD20,000 as interim maintenance for each of the children and such interim maintenance becomes final upon pronouncement of the Decree Absolute.
5. On 9 August 2017, by consent it was further ordered that joint custody of the children of the family be granted to the parties, with care and control to the Mother and access including stay access to the Father. On 14 February 2018, the Decree Absolute was pronounced. The Father made full payments of maintenance pursuant to the consent order dated 27 October 2016 until December 2018. Whereas default has been made in respect of the maintenance payments payable under the said order since January 2019, on 12 April 2019 the Mother issued judgment summons against the Father. On 4 July 2019, the Father took out the present application.
6. The Father’s application to vary down is made pursuant to section 11 (7) of the Matrimonial Proceedings and Property Ordinance Cap. 192, which provides that:
“(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of the matters to which the court was required to have regard when making the order to which the application relates ……”
7. The correct approach was summarized by the Court of Appeal in AEM v VFM  3 HKLRD 36. In that case, the Hon Cheung JA made the following points when setting out the law:
(1) The exercise of the power under s.11(1) of the Matrimonial Proceedings and Property Ordinance (Cap.192) to vary a periodical payment order required that all the circumstances of the case be considered, including any change in circumstance since the original order was made, such as continuing inflation, increased costs of raising a growing child, the greater adverse effect of increased costs of living on one of the parties and the husband’s increased wealth. The court was not required to proceed from the starting point of the original order but could look at the matter afresh. The basis and intended effect of the original order were also relevant factors and the court should not depart radically from the parties’ agreement embodied in a consent order (Lewis v Lewis  1 WLR 409, Boylan v Boylan  FLR 282, Primavera v Primavera  1 FLR 16, Garner v Garner 1 FLR 573, Cornick v Cornick (No 2)  2 FLR490, Flavell v Flavell  1 FLR 353 applied; Foster v Foster  3 All ER 541 not followed). (See para.14)
(2) The court had an almost unrestricted power to vary its own order retrospectively and to backdate any variation to a pre-existing order beyond the date of the application for variation. In practice, orders were not usually backdated to a date prior to the notice of application to vary, unless the justice of the case so required. (See para.15)
8. Therefore, in considering a change of circumstances, I may look at the case de novo. In other words, the court is not necessarily fettered by the existence of a previous order and, although the basis and intended effect of the original order are relevant, I may look at the situation afresh and make an order based on the parties’ existing financial circumstances.
9. The court has a very wide power, including a power to terminate payments and to backdate the variation ordered. The overall objective is to achieve a fair outcome.
The Father’s case
10. The Father used to work for banks. In 1998, the Father started his own business as an advisor in mergers and acquisitions together with other shareholders and partners. He was the managing partner and founder of a small advisory Dutch limited company (‘SCD’) that was the operational company. The Father and his partners pooled their income in SCD. They then charged management fees based on their contributions from their personal companies to SCD. In the Father’s case, he charged management fees from a Dutch company (‘EJKM’) 100% owned by him. In 2011, the Father moved to Hong Kong to develop an advisory business in relation to China. The Father and other investors have put in the business about 3 million euro over the years from 2011 to 2013. Unfortunately, the business did not work out. After the loss of all investments, the Hong Kong company was terminated. The Father went back to the Netherlands to work in SCD in 2015. Yet he could not contribute enough clients and projects to SCD. In 2017 and 2018 he was not successful and could only effectively close 1 deal. The vast majority of revenues came from his partner. By 2017 and 2018, only he and one partner left behind working on most business. By the end of 2018, they concluded that they could not continue like they did and decided to separate business. The Father stepped down as a director in 2018 and they agreed to run down the business. For that reason, a new company (‘SV’) was incorporated under a new management holding company (‘ZACK’) that in turn is owned by a foundation consisting of the Father’s friends and business partners. The Father is not a shareholder or director of SV or ZACK. The new business is focused on ‘Impact Funding’. The Father will manage and develop the business based on his experience and will be paid a salary if revenues and cash are available. In the Father’s opinion, the outlook for that business is uncertain as it is new with a new concept. The Father anticipates that revenues will be less than half of what he realised in the years before. In November 2018, the Father and his new girlfriend gave birth to a new baby girl in the Netherlands. In the circumstance, it is the Father’s case that there has been a significant change of circumstance that necessitates a variation down in the maintenance. It is of note that he is not seeking for the discharge of the undertakings given by way of the previous order.
The Mother’s case
11. The Mother for her part maintains that there is no proper basis for the Father’s application, and that the Father was hiding the truth about his income. She believes that the Father is more than capable to make the current maintenance payment so much so that the maintenance payment not only should not go down but should go up to an amount commensurate with the current needs of the children of the family.
12. The issues to be determined include:
(a) What are the income, earning capacity, property and other financial resources that each of the parties has or is likely to have in the foreseeable future?
(b) What are the financial needs, obligation and responsibilities that each of the parties has or is likely to have in the foreseeable future?
(c) Is there any change of circumstance?
(d) What is the appropriate level of maintenance to be paid by the Father going forward?
13. As per the Father’s Form E filed on...