Financial Provision for Children

Financial Provisions for Children – (Married or Unmarried Parents)

Section 5 of the MPPO provides the court’s jurisdiction to grant financial provisions for the child of the family and they include:

(1) periodical payments

(2) secured periodical payments

(3) lump sum payments

A lump sum order can also be made for the payment of liabilities or expenses incurred before the application. Under s. 5(3), it provides,

“(3) Without prejudice to the generality of subsection (2)(c), an order under this section for the payment of a lump sum to any person for the benefit of a child of the family, or to such a child, may be made for the purpose of enabling any liabilities or expenses reasonably incurred by or for the benefit of that child before the making of an application for an order under this section to be met.”

Section 7(2) of the MPPO provides 5 factors that the court must have regard to and they are:

(a) the financial needs of the child;
(b) the income, earning capacity (if any), property and other financial resources of the child;
(c) any physical or mental disability of the child;
(d) the standard of living enjoyed by the family before the breakdown of the marriage;
(e) the manner in which he was being and in which the parties to the marriage expected him to be educated.

Section 10(1) of the MPPO provides that no order is to be made to a child over the age of 18 if it appears to the court that-

(a) that child is, or will be, or if such an order or provision were made would be, receiving instruction at an educational establishment or undergoing training for a trade, profession or vocation, whether or not he is also, or will also be, in gainful employment; or

(b) there are special circumstances which justify the making of the order or provisions.

The power for the courts to make financial orders for children born out of wedlock

s.10(2) of Guardianship of Minors Ordinance (“GMO”) provides,

“(a) an order requiring payment to the applicant by the parent or either of the parents of the minor of such lump sum (whether in one amount or by instalments) for the immediate and non-recurring needs of the minor or for the purpose of enabling any liabilities or expenses reasonably incurred in maintaining the minor …

(b) an order requiring payment to the applicant by such parent or either of such parents of such periodical sum towards the maintenance of the minor

(c) an order requiring the securing to the applicant by such parent or either of such parents, to the satisfaction of the court, of such periodical sum towards the maintenance of the minor …

(d) an order requiring the transfer to the applicant for the benefit of the minor, or to the minor, by such parent or either of such parents, of such property, being property to which the parent is entitled

(e) an order requiring the settlement for the benefit of the minor, to the satisfaction of the court, of such property, being property to which such parent or either of such parents is so entitled …”

Section 10(2)(a) “… immediate and non-recurring needs of the minor”

IDC v SSA (CACV 91 of 2013) 

Lam VP, giving judgment explained,

“11.  In 1986, by Ordinance No 65 of 1986, the power to award lump sum payment was added to Section 10(2)(a).  It would appear that this change was precipitated by changes in the same direction in England.  Under the Domestic Proceedings and Magistrates Courts Act 1978 and the Family Law Reform Act 1987 (which introduced a new section 11B(2) to the Guardianship of Minors Act 1971), the power to order lump sum payment was provided.  In the memorandum for Executive and Legislative Councils in respect of the 1986 amendments to the GMO, the purposes of the amendment were explained as follows:

“To empower the court under all three ordinances [including the GMO] as in similar legislation in England and Wales to order payment in the form of a lump sum either in one amount or by instalments and to permit such an order to be made either in addition to or instead of an order for periodical payments. To ensure that a lump sum payment in respect of a child is limited to one for the child’s immediate and non-recurring needs.”

12. In the English statutes, there was no reference to “immediate and non-recurring   needs”.  Thus, though one of the purposes of the 1986 amendment was to follow the trend in England, this additional qualification was a special feature in the Hong Kong legislation.  In the same paper, the reasons for allowing maintenance orders by lump sum payments were given at para 8 as follows:

“… a lump sum order could provide for non-recurring expenses for which a periodical payments order may be unsuitable, for example the expenses of medical treatment, or of meeting reasonable expenses for maintenance incurred before the making of the order …”

13. At the Second Reading of the bill on 29 October 1986, the Attorney General gave similar reasons for moving the bill.  He also gave the examples of expenses of school uniforms and equipment.

14. Thus, section 10(2)(a) of the GMO was amended to its present form in 1986 and the qualification that the lump sum is to meet “immediate and non-recurring needs” was introduced in such circumstances.” (paras. 11 – 14)

Hence, is the lump sum award under s.10(2)(a) is going to be one off lump sum?

Lam VP went to explain, “20.  From the examples given in the legislative materials (expenses for medical treatment, school uniform and equipment), it could not have been the legislative intent that this power can only be exercised once as in the case of lump sum award in favour of a spouse under MPPO.  A child may need to have non-recurring medical treatment on more than one occasion.  Having regard to the statutory context, we are also of the view that the power under Section 10(2)(a) can be exercised more than once.  First, there is no explicit wording in the statutory provision which limits the power to be exercised on one occasion only.  Second, the power is to cater for the needs of a child which may span over a long period of time. The concept of clean break as between a husband and wife which underlies the lump sum award under the MPPO in such context has no application to the relationship between a parent and a child.  Third, the sub-paragraph refers to “immediate need”. Thus, in each application, the court can only make a lump sum award for needs within the immediate future.  In the case of a child of tender age (like Z in the present case who is only 5 years old), there must be non-recurring needs several years down the road which cannot be covered by a lump sum award made today. We cannot see any sound policy reason for denying a second or a third application being made some time in the future with regard to such future non-recurring needs when they become immediate.” (para. 20)

Section 12A of GMO was introduced to extend the duration of the financial orders for children to beyond the age of 18 in certain circumstances, in line with the provisions in MPPO.

The only test set out in s.10(2) of GMO appears to be what the court thinks is reasonable having regard to the means of the parent against whom an order is being sought.

It appears that the Courts in Hong Kong have adopted the principles and guidelines set out in the English cases ,particularly Re P (Child:Financial Provision) [2003]2 FLR 865, in considering what financial orders are reasonable for the benefit of a child born out of wedlock.

Bodey J. set out the relevant considerations on an application for financial orders for children born out of wedlock and they are:

  • The welfare of the child, although not paramount, is naturally a very consideration as one of “… all the circumstances of the case.
  • Considerations as to the length and nature of the parents’ relationship and whether or not the child was planned are generally of little if any relevance, since the child’s needs and dependency are the same regardless: J v C (child: financial provision) [1998]3 FCR 79, at 81.
  • one of the ‘financial needs of the child’ is for him or her to be cared for by a mother who is in a position, both financially and generally, to provide that caring. So it is well established that a child’s need for a carer enables account to be taken of the caring parent’s needs: Haroutunian v Jennings [1980] FLR 62 at 66; and A v A (financial provision for child) [1995] 1 FCR 309 at 317.
  • the respective incomes, earning capacities, property and other financial resources of each of the parents must be taken into account, together with their respective financial needs, obligations ands responsibilities. So, ‘child is entitled to be brought up in circumstances which bear some sort of relationship with the father’s current resources and the father’s present standard of living’: J v C (child: financial provision) [1998]3 FCR 79 at 87
  • the latter concept lends itself to demands going potentially far wider than those reasonably necessary to enable the mother properly to support the child and it is necessary to guard against unreasonable claims made on the child’s behalf but with the disguised element of providing for the mother’s benefit rather than for the child; J v C (child: financial provision) [1998]3 FCR 79 at 87
  • in cases where the father’s resources permit and the mother lacks significant resources of her own, she will generally need suitable accommodation for herself and the child, settled for the duration of the child’s minority with reversion to the father; a capital allowance for setting up a home and for a car; and income provision (with the expense of the child’s education being taken care of, generally, by the father direct with the school);
  • such income provision is reviewable from time to time, according to the changing circumstances of the parties and child;
  • the overall result achieved by orders under Schedule 1 should be fair, just and reasonable taking into account all the circumstances.

Bodey J added three factors for considerations and they are: –

  • “In considering the mother’s budget, at least in bigger money cases, the court   should paint with broad brush, not getting bogged down in detailed analysis and categorisations of specific items making up opposing budgetary presentations. Rather, the court should do its best to achieve fair and realistic outcome by the application of broad common sense to the overall circumstances of the particular case.
  • Comparisons with the commercial cost of providing professional care are unlikely to be of great assistance and may only serve to distract.
  • When setting up a budget for the sort of lifestyle a child should be enabled to have, the court should not generally attach weight to the risk that the father may reduce or withdraw his support when the child comes of age (or ceases education or training) thereby obliging the child to adapt to a lower lifestyle at that time.”

“Purchasing a Property for the child”

Whether a father can be ordered to purchase a property for a child born out of wedlock.

IDC v SSA (CACV 91 of 2013)

Lam VP said in the judgment,

“23.  We can now come to the crucial question on Section 10(2)(a) in the present context: can the purchase of a property for the accommodation of the child be described as “immediate and non-recurring needs”? The Judge accepted the submission of Mr Coleman SC (who appeared below for the Father and in this appeal appearing together with Mr Todd) that a lump sum to purchase a property for a child does not come within that sub-paragraph because a need for housing cannot be said to be non-recurring.  Such a need, the Judge said, is an on-going everyday need …

  1. On this point, we agree with the Judge and Mr Coleman.  We are of the clear view that the housing need of a child is a recurring need.  The attempt to have the need satisfied by a property owned by a parent would not change the nature of the need to a non-recurrent one. For a variety of reasons, the child may have to be relocated to some other residences in the years ahead and her housing need would still have to be satisfied.  The purchase of a property to cater for such need for the time being cannot satisfy such need once and for all. Phillips v Peace [2005] 2 FLR 1212 cannot be regarded as the authority that our courts do not have any power under the GMO to provide for such need when it is necessary to do so.  We do not have the equivalent of para 1(5)(b) of Sch 1 of the Children Act in the GMO.  On the contrary, Section 10(4) gives our courts the power to vary, discharge, suspend or revive a settlement order made under Section 10(2)(e).” (para. 26)

What about s.10(2)(e) of the GMO?

Lam VP continued,

“29.  Turning next to Section 10(2)(e), Mr Pointer’s submission is a simple one: “property” which shall be the subject matter of a settlement order can be a sum of money.  Though there is no definition for “property” in the GMO, a wide definition is given in the Interpretation and General Clauses Ordinance Cap 1, section 3:

“… ‘property’ includes (a) money, goods, choses in action and land; …”

  1. In the context of the MPPO, Section 2 defines “property” to include money.
  1. Bearing in mind the legislative history, the purpose for which Section 10(2)(e) was added to the GMO in 1993 to give effect to the recommendation of the Law Reform Commission on equality between legitimate and un illegitimate children, the similarity in language between Section 10(2)(e) of the GMO and Section 6(1)(b) of the MPPO, we do not see any reason to give a narrower interpretation to the meaning of “property” in Section 10(2)(e).  The context of the GMO does not require a different meaning from that laid down in Cap 1 to be given to this word.
  1. Mr Pointer referred to a line of English authorities to demonstrate that orders were made under a similar provision for settlement for the benefit of a child of unmarried parents for funds to be provided for the purchase of a house for his or her accommodation during the period in which the father was obliged to maintain the child with the reversion to the father at the end of the trust.  For the purpose of this judgment, we only need to mention the following cases: J v C [1999]1 FLR 152; Re P [2003] 2 FLR 865;  F v G [2005] 1 FLR 261; Re S [2006] 2 FLR 950; MT v OT [2008] 2 FLR 1311. …
  1. … It is perfectly viable to have a sum of money to be settled on trust for the purchase of a property to be used for the benefit of the child up to a certain point in time and thereafter to be held for the father by way of reversion.” (paras. 32 – 34)

IDC v SSA [2015] HKCFA 16

Ma CJ in his judgment said,

“The original application under the GMO was dismissed by His Honour Judge Bruno Chan who took the view that there was no jurisdiction to make any such order, essentially because under s10(2)(a) of the GMO, a court could only order “… such lump sum … for the immediate and non-recurring needs of the minor” and housing was not an one off or non-recurring need. Instead, he ordered periodic payments by the father sufficient to rent an equivalent apartment. I shall refer to the position of a parent such as the father in the present case in proceedings under the GMO as “the paying parent”.

  1. On appeal, reversing the decision on lack of jurisdiction, the Court of Appeal held that while the court did not have a discretion under s10(2)(a) to order a lump sum payment to purchase a property for the accommodation of the child, mainly because an order for a lump sum was not appropriate where the intention was to reserve a reversionary interest, there was jurisdiction under s10(2)(a) of the Ordinance. However, on the facts, the Court of Appeal declined to make any such order.” (paras. 2 – 3)

Ma CJ said, “the decision of the Court of Appeal was plainly right. Briefly stated, it was noted that the child had lived in the same rented property for 3 years (buying a flat would presumably require moving) and the existing housing arrangement provided to the child was held to be reasonable by the learned District Judge and accepted to be so by Mr. Pointer in the Court of Appeal. The Court of Appeal was satisfied on the evidence that there would not be any problem about the father paying the rent(or the increased rent) in   the future. Moreover, the mother was considering permanent re-location out of Hong Kong. As the Court of Appeal noted, it was said in one of her affidavits that she could not exclude the idea of relocation. It is to be observed that the applicant is in Hong Kong only on a tourist visa. Also the father was concerned about the timing of investing into the property market in Hong Kong.

  1. It was also contended by Mr. Pointer that the Court of Appeal had somehow discriminated between a child born within and one born outside wedlock. There was no basis for this. …” (paras. 9 – 10)

The Standard of Living of a Child Born out of Wedlock

J v C (Child: Financial Provision) (1999)1 FLR 152,

Hale J (as she then was) said, “The child is entitled to be brought up in circumstances which bear some sort of relationship with the father’s current resources and the father’s present standard of living. Parents are responsible   for their children throughout their dependency. The fact that such riches as they may have come after the break up of the relationship cannot affect that”.

Support to other children of the mother but not the father

In J v C (Child: Financial Provision) (1999)1 FLR 152,

Hale J (as she then was) said in answer to an objection to providing housing for the mother’s two illegitimate children from another relationship, this was immaterial   because the daughter’s needs did not greatly effect the cost of keeping a roof over the head of the relevant child and her carer.

“Mother Allowance” or “Carer’s Allowance”

The proposition of inclusion of a “mother’s allowance” in the maintenance for a child was accepted by Ward J in A v A (A Minor: Financial Provision) [1994]1 FLR 657. In determining the financial needs of the child the subject of a maintenance claim, Ward J said in his judgment that “[The child] has a financial need to be able to remunerate the full-time staff that would have to be employed to look after her, 24 hours a day. Her mother does this, for nothing. It is now well established that the amount of maintenance for the child can include an allowance for the mother: Harountunian v Jennings (1980) FLR 62).

…There is no evidence before me to enable me to quantify this precisely. … I bear in mind a broad range of imprecise information from the extortionate demands (but excellent service) of Norland nannies, to au pair girls and mother’s helps, from calculations in personal injury and fatal accident claims and from the notice-boards in the employment agencies I pass daily. I allow 8000 pounds under this head. It is almost certainly much less than the father would have to pay were he to be   employing staff, but to allow more would be- or would be seen to be- paying maintenance to the former mistress who has no claim in her own right to be maintained.” (p. 665)

K and W HCMP 1518 of 1996

Deputy Judge Hartmann (as he then was) accepted the principle of “mother allowance”. Hartmann J (as he then was) ordered a sum of HK$8,000 per month as the “mother’s allowance”.   He explained that just as it would be perfectly proper for the mother to claim the expense of a maid to look after the child while she was working. It is proper for the mother to claim a remuneration for herself for taking on the duty.

In H v S (Financial Provision for Child of Unmarried Parents) (FCMP 70 of 2008)

HH Judge Chu (as she then was) said, “Following Re P and H v M, I would adopt   a broad brush approach in relation to the assessment of a reasonable budget for T and M being her carer, bearing in mind that inevitably there is likely to be a difference of perception between what the mother may see as her reasonable needs to enable her to provide for the child, and what the father may see as her attempt to improve her own lifestyle (H v M para 82, page 11), and further bearing in mind that F’s lifestyle in the present case is more modest than the fathers in some of the English cases.” (para. 149)