Modifying Financial Agreements/Orders Post-Divorce

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Modifying Financial Agreements/Orders Post-Divorce

Change is constant and one of the things we can count on is that after a divorce, there may be many circumstances that change which require an amendment/modification to agreements and orders made at the time of the divorce.  These changes can involve child custody arrangements, and also financial agreements which were made years beforehand.  What can you do in order to amend or modify financial agreements made either by agreement with your former spouse or through an order by the Family Court?  In this article, we will explore how modifications and amendments can be made and what the Family Court will look at in order to modify/amend financial orders.

  1. How to Modify Financial Agreements/Orders Post-Divorce:
    Generally speaking, if you want to modify or amend a financial agreement, you will need to file a Summons (application) with the Family Court.  Your solicitor can assist with the filing of the appropriate Summons and supporting affidavit in order to request a modification of the previous orders.  Alternatively, if you wish to avoid Family Court intervention, you may want to contact your former spouse or your former spouse’s solicitor through your own solicitor and mediate or negotiate a change in the financial arrangements.  Negotiating a change to your financial agreement through mediation is the easiest, time saving and cost-saving alternative to court litigation and should be considered first before resorting to filing an application with the Family Court.
  2. Consider Negotiating The Financial Modification:
    As mentioned above, it is important to consider negotiating a financial modification rather than simply filing an application with the Family Court. Resolution of an application filed with the Family Court will take a long time as the Family Courts in Hong Kong are backed up with many other applications.  Thus, the waiting time should be considered because you will need to be patient before your case can be heard by a Judge not to mention additional time for the Judge to make a decision about your request which could take months after a hearing. Given that it takes time for the Family Court to hear your case, the prolonged time between filing your application and it being heard will also run up costs which you will incur not only with your solicitor fees but also potential barrister fees if your application is contested before the Judge at a hearing.  It is important to note that even if you go before a Judge, the Judge will usually give you and your former spouse an opportunity to consider coming up with an agreement before he/she makes an Order. Thus, it makes sense that you and your former spouse try and attempt to come up with a compromise, rather than waste time and costs going to Court.
  3. Has There Been A Change Of Circumstances?:
    In the event you and your former spouse cannot come up with an agreement through your own mediation or negotiation, you will need to file a Summons with the Family Court.  In your application, you will want to highlight the reason for the request and explain in detail with proof as to why there has been a change of circumstances.  Change of circumstances can include a loss of job or wages, change of job and wages, medical issues that you may be experiencing and which have resulted in unexpected expenses or your ability to earn a living. You will want to discuss these changes of circumstances with your solicitor so he/she can guide you as to what points should be presented to the Court and what the Judge is likely to consider a good reason for the request for a change or amendment to your financial orders.
  4. Has There Been Any Changes In Need?:
    The types of change of circumstances mentioned above are usually relevant when you are the spouse wanting to modify maintenance orders downwards. If however, you are the spouse wanting to modify maintenance upwards, you will want to provide sufficient reason as to how things have changed that would require the need for more maintenance.  For example, has there been circumstances whereby your child/children have increased costs related to schooling or unexpected medical conditions?

The above is a simple guideline of what you can do if you wish to modify a financial agreement, however each situation will be specific to your own individual circumstance. Depending on how your financial agreement was structured at the time of the divorce, you may not be entitled to modify a financial agreement if there was a “clean break” clause with respect to your spousal maintenance.  It is important to note however, that when it comes to child maintenance there is no “clean break” clause and they can always be modified depending on your circumstances. Generally speaking, in Hong Kong the types of orders that can be varied include: interim maintenance (maintenance pending suit); periodical payments (maintenance), instalments by which a lump sum is payable and an order for sale of a property.  As always, it is important that you speak directly with your solicitor so he/she can guide you through the process and provide adequate advice on whether a modification or amendment can be made, and what you can expect if you file an application to modify or amend a financial order.

How Retirement Assets Are Divided In Divorce

In a divorce, one of the assets that may be subject to division are retirement assets. For many individuals, the thought of having to divide this asset is painful especially when a lot of blood, sweat and tears have gone into an individual’s work over the years and the retirement assets are essentially the evidence of such hard work. Similar to other assets such as cash, property and personal property, retirement assets may be included in the overall asset pool subject to division during a divorce pursuant to Section 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”).
Let us take a closer look at the division of assets in a divorce:

1. Asset Division in Hong Kong in Divorce:

In Hong Kong, the Family Court will look at several factors pursuant to Section 7 of the MPPO, Cap 192. These factors include the following:
• Income: The Court will look at each parties’ income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future.
• Financial Needs: The Court looks at financial needs, obligations and responsibilities that each party has or is likely to have in the foreseeable future.
• Standard of Living: The Court will consider the standard of living enjoyed by the family before the breakdown of the marriage.
• Age of the Parties: The Court looks to age of each party and also the duration of the marriage.
• Any Physical/Mental Disability: Here, the Court will look to see if there are any physical or mental disability of the parties.
• Contributions: The Court will look to the contributions made by each of the parties to the welfare of the family, including any contributions made by looking after the home or caring for the family.
• Value: Under this category, in the case of proceedings for divorce or nullity of the marriage, the Court will look at the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

2. The 3 Step View to Decide Asset Division and Provision for Maintenance:

The Court in Hong Kong will look at the factors listed above pursuant to Section 7, Cap. 192 MPPO and will compute all the available assets of the parties and distribute it according to 3 key principles:
• Need
• Compensation
• Sharing
In first identifying the assets in the matrimonial pool, the Court will include assets under both parties’ names, both during the marriage and also assets one party would have acquired before the marriage. Yes, it is important to note that in Hong Kong a party’s inheritance could be included in the division of assets in a divorce. The goal of the Court is to achieve fairness in the distribution of a couple’s assets and not necessarily a 50/50 equal division. Generally speaking, the Court may also depart from equality if the marriage is a long-term marriage and the view of the Court is to assess the financial needs with a generous assessment of needs post-divorce.
In identifying the asset pool, the Court will look at the parties’ Form E which is the financial disclosure form that is filed and exchanged by the parties at the beginning of a divorce.

3. Retirement Assets:

So, the question is whether retirement assets will be included in the asset division. Yes, it will be and likely awarded to the party associated with the retirement asset. However, upon distribution of the assets, the party associated with the retirement asset will then have to make up for that payment owed to the other spouse from another source. For example, if a husband is awarded his retirement funds from his employment, he may need give the wife a larger share in the matrimonial home division to equal out the division based on the fact that he received his entire retirement asset.
It is important for you to consult with a solicitor so they can provide you with a better idea as to how the Court will handle the division of the asset pool and what you are entitled to given your own specific circumstances. Your solicitor can provide their analysis on whether the Family Court Judge will depart from equality as it is highly dependent on the facts of your case. Your solicitor can also help you come up with creative ideas as to how to approach the asset division especially if you are working towards a settlement with your former spouse.

Spotlight Profile: Crypto Assets in the Matrimonial World – Featuring Barrister Madeleine Booth

In this Spotlight Profile, we are speaking with Barrister, Madeleine Booth of Bernacchi Chambers in Hong Kong about cryptocurrency and what it means in the matrimonial world.  Cryptocurrency is a relatively new type of asset that is increasingly appearing as a key focus in matrimonial cases.

Madeleine was part of a panel discussion with The Hong Kong Family Law Association on cryptocurrency in the matrimonial world.  Today we speak to her about this area and what individuals should know about cryptocurrency when they are going through a divorce.

Madeleine, it is a pleasure to have you back at Hong Kong Divorce and wonderful to discuss such an important and relevant topic such as Cryptocurrency.  First of all, we know that many individuals are now invested in the Cryptocurrency market and hold Cryptocurrency assets.  How do the Family Courts define Cryptocurrency? Is it considered property or currency?

Thank you for having me back.

Crypto-assets or cryptocurrency have all the indicia of property and sufficiently meet the definable qualities of property. This has been confirmed in a few cases: see for example the UK decision AA v Persons Unknown [2020] 4 W.L.R and also the Singapore International Commercial Court decision in B2C2 Ltd v Quoine PTC Ltd [2019] SGHC (I) 03.

Having said that, the approach of the Hong Kong Family Court to crypto-assets has yet to be established. As of July 2022, no Hong Kong Family Court judgments have been handed down touching on crypto-assets in notable detail. But there is a growing body of case law in other jurisdictions and outside of the family law sphere, which consistently indicate that crypto-assets are treated in the same way as traditional assets such as cash, shares or gold and therefore subject to similarly applicable orders, including freezing injunctions preventing dissipation.

There is a belief out there that Cryptocurrency is not even real and that there is no need to disclose Cryptocurrency because it is so volatile and not “paper” money.  What’s the danger about this view and how it’s played out in the divorce arena?

Crypto-assts are very much “real” and fall well within the realms of being disclosable. In Hong Kong, parties undergoing divorce have an ongoing duty of full and frank disclosure. They must be honest with each other and the court about their financial circumstances, including investments or the holding of crypto-assets. The disclosure process in Hong Kong includes the exchange of a financial statement known as a “Form E” whereby both parties are required to provide details on their assets held globally (e.g., cash in bank, properties, stocks, insurance policies), amongst other things. Crytpo-assets are disclosable under part 2.11 of Hong Kong’s current Form E. A party must verify the contents of a Form E with a sworn statement of truth. Parties who attempt to hide assets face very severe consequences from the court.

If the court finds that a party has deliberately sought to avoid disclosing assets, adverse inferences will likely be drawn against that party. The court may consider it appropriate to “addback” a certain sum to the matrimonial pool of assets for division.  The court will also likely consider such behaviour a form of litigation misconduct which will result in an unfavourable costs order being made against the non-disclosing party. The court’s approach in such situations is dependent on a host of variables which cannot fairly be set out summarily above: a topic for another article, perhaps!

Practically speaking, in Family Law disputes, will the Hong Kong Family Court consider Cryptocurrency as income when determining issues such as ancillary relief for the other spouse and child support?

Cryptocurrency is considered an asset akin to any other property, not income. There may be instances where a spouse trades cryptocurrency to generate income, and the Hong Kong court has no reason not to recognise this. Unfortunately, there has yet to be a Hong Kong case explicitly enunciating this point. It is possible, however, to look to the approach adopted in other common law jurisdictions. For example, in the relatively recent Canadian case Hauber v Sussman, 2020 ONSC 6695 (CanLII), the court acknowledged that a spouse may rely on cryptocurrency to generate income to fulfil maintenance obligations.

At what point in a divorce is Cryptocurrency valued? For example, is it valued at the time of separation or at the time of division of assets?

It is settled law that parties’ assets are valued at the date of trial: see Cowan v Cowan [2001] 2 FLR 192, cited and applied in Hong Kong. This is the general approach, even with respect to volatile assets, such as businesses, property and, by extension, crypto-assets.

Given that the purpose of valuations is to assist the court in fairly determining the outcome of a case, it is foreseeable that some parties, owing to a sharp increase/decrease in the value of the crypto-assets, may wish to argue for the court to use another valuation date (e.g., the date of separation, the date of petition). It remains to be seen whether the Hong Kong courts (or the UK courts) will entertain a departure from the date of trial. If another valuation date is sought, it may be worthwhile to explore entering into an agreement with the other party, mutually agreeing on another valuation date. There are a few cases outside of Hong Kong where a different date of valuation has been adopted, but these are rare anomalies where the court concerned opted to do so for exceptional reasons.

What are some potential issues that individuals could come across when dealing with Cryptocurrency in a divorce? 

Three readily identifiable issues come to mind:

Disclosure: (1) As mentioned, a duty of full and frank disclosure applies. In Hong Kong, there are rules in place dictating the extent of disclosure in divorce proceedings. One party may need to seek additional disclosure to properly assess the other party’s financial situation. If the other party does not agree to provide the information sought, an application for specific discovery may need to be made.

(2) Crypto-assets are inherently volatile and known to potentially fluctuate enormously within short periods of time. While the party who does not hold the assets may be concerned with keeping updated on such developments as frequently as possible, the other party’s ongoing duty of disclosure must be balanced against imposing what may be considered an onerous or unfair burden to provide disproportionate levels of disclosure.

New territory: Crypto-assets are relatively new, can be complex, and are not necessarily universally understood as yet. How they are dealt with in the family law sphere is very much an evolving area. As such the court may likely require the assistance of an expert to provide information on the issue to fairly determine the case. Similarly, a party involved in a complex case may benefit from the advice and assistance of a forensic accountant (although costs may be an issue). This could be particularly key in instances where one party is attempting to hide assets as a forensic accountant familiar with crypto-assets could identify gaps in disclosure and potentially quantify sums of money not properly accounted for.

Arguments on risk/volatility:  It is not uncommon for one party to argue that the other party’s unwise and/or speculative investment justifies an “add-back” to the matrimonial pot of the sum that has been spent. The court does have the discretion and power to order the adding back of certain sums, but this is contingent on it being established that a party’s dissipation of assets was wanton and/or reckless spending of a very flagrant and exceptional standard. For example, gambling and drug and alcohol misuse have been held to constitute “reckless and wanton spending” justifying an add-back order. Unwise, risky and/or speculative business decisions, however, have not: see, M v M (Third party subpoena: financial conduct [2006] EWHC 2250 (Fam)).

There seems to be a sense of belief that Cryptocurrency can be hidden in a divorce. First of all, how difficult/easy is it to trace Cryptocurrency?  Is it possible for individuals to “hide” these assets and if they do, what could be potential consequences in a divorce?

As has been expressed above, any belief that one can hide assets of any nature in a divorce, including crytpo-assets, is misguided and not to be encouraged. It will not be entertained by the court. Deliberate non-disclosure of an asset is unlikely to be successful and will attract serious consequences, which have been set out above already.

Cryptographic or cryptography means encrypted in code. Inherent in the use of cryptocurrency is the concealment of identity; both the public and private end utilize encoded data. Cryptocurrencies are not an entirely anonymous system, however.  While it’s not possible to identify someone from a cryptocurrency address alone, depositories or third party cryptofinanciers (Bitfinex, Coinbase, etc) are often involved. This is important as those companies are required to maintain KYC (“know your client”) documents about their account holders (passport/identification information, etc). This is therefore a useful route to information about the owner of the wallet, as an example.

On the ability to trace, as with many things, this is a question of degree dependent upon the particular facts of the case and the assets involved. There are multiple cases concerning crypto-assets in Hong Kong and other jurisdictions where injunctions have been obtained together with discovery orders enabling the successful tracing of assets.

Cryptocurrencies present an exciting opportunity for new developments in law to address a changing financial landscape; it will be interesting to observe how the Hong Kong Family Court responds.

About Barrister Madeleine Booth: 

Recognised as a “Rising Star” in the area of Family and Private Law by the Legal 500 (2022) and as a leading junior barrister in “Family & Divorce Law” by Doyle’s Guide (2022) Madeleine’s practice is primarily civil litigation based, with a particular specialisation in family/matrimonial law.

“An exceptional barrister. Intelligent, articulate and incisive. She reads the court well and is nimble on her feet.” – The Legal 500, Asia Pacific Hong Kong Bar (2022).

Madeleine has broad experience in the Family Court and High Court regarding all manner of contested financial and child related matters, including financial dispute resolution hearings, children dispute resolution hearings, maintenance pending suit and litigation funding applications, ancillary relief trials and preliminary issue trials (trusts, properties, companies etc.), custody, care and control disputes, relocation applications, and applications under the Guardianship of Minors Ordinance). Madeleine also has experience in urgent ex parte applications (s 17 MPPO, DVO) obtaining various reliefs, and probate and inheritance (including applications under the Inheritance (Provision for Family and Dependents) Ordinance) cases.

In addition to family law, Madeleine has experience in civil litigation matters, including actions in tort and trust related cases. Madeleine’s experience extends beyond advocacy to include providing written opinions, legal advice, and participating in mediation.

Divorce and Mental Health

The team at Hong Kong Divorce believes in the importance of self-care and health practices that nourish the mind, body and soul.  Healthy relationships really stem from a healthy mental state and divorce is a traumatic experience that can impact both your health and the health of your children.

As we have seen in our discussions with mental health professionals, learning how to communicate with one another and engaging in open discussion with your children assists in the healing process of divorce and stepping into a hopeful better future which becomes yours and your children’s “new normal.”

Through our many discussions with mental health professionals across Hong Kong, we have gathered useful tips from these experts from a mental health perspective on what individuals going through a divorce should remember during this difficult time:

Tip #1:  Learn to Communicate from the Heart – While changing behaviours is desirable, ultimate change comes from heart change.  According to Dr. Ida Ng, Licensed Psychologist, “[l]earned behaviour is not what naturally flows from the heart where emotions reside and by not addressing the emotions, the issues are not able to resolve.”

Tip #2:  Accept Change – In a divorce, individuals go through several changes and they are now learning to live a world where they must accept a new reality or a “new normal.”  For many, the change is so drastic that it is difficult to accept.  Learning to accept that changes are occurring and allowing yourself the time and space to adapt to the changes is key to healing.  This includes the changes your children may be experience as well.  Provide an open space and forum for your children the ability to speak freely about the changes they are experiencing and the corresponding emotions related to such change.

Tip #3:  Communicate, Communicate and Communicate More – Communication will be key during your divorce.  Individuals must learn to employ effective communication skills not only with their respective ex-partners whether it be through the process of divorce or during co-parenting challenges, but communication will also play a big role in the healing of your children.  This may be the opportune time for couples to attend couples therapy and for children to also attend therapy to allow them a safe space to communicate their feelings and emotions related to the divorce.  Dr. Ken Fung, clinical psychologist at the Jadis Blurton Family Development Center states that “[c]ouples therapy is a tool/platform to create a safe, comfortable and natural platform for couples to communicate with each other.  It is a way for couples to connect emotionally because many couples have been talking intellectually but that didn’t work out so in my sessions, I help them connect emotionally.”

Tip #4:  Employ Empathy and Compromise – As difficult as it might be in a divorce, it is important for couples to understand where their partner and his/her views are coming from.  By only focusing on your own views in a divorce, it becomes difficult to reach a compromise which is essentially a key element in having a healthier divorce and avoid a divorce that is litigious and stressful.  The ability to empathize and compromise will play an even bigger role if you and your spouse are forced to co-parent.  If your children are able to see that both parents can co-parent in a respectful way, you will see a healthier family dynamic post-divorce and this will allow your children to learn from such behaviour in how to navigate their own relationships going forward.

Finally, a uniform consensus among mental health professionals is to mix therapy along with other self-care alternatives.  You may therefore want to consider focusing on self-care activities such as meditation, acupuncture, reiki or any other healing methods that result in peace of mind and relaxation.  You may also consider focusing on your hobbies which can bring great joy and allows your mind and spirit to relax during one of the more stressful times of your life.

The team at Hong Kong Divorce has been conducting in-depth interviews with several mental professionals around Hong Kong and these Spotlight Profiles can be found as a resource on our website.

Non-Molestation Orders

One of the most recognized celebrities, Kim Kardashian has recently been going through an ugly divorce with Kanye West in Los Angeles, California. Throughout her very public divorce, Kim Kardashian has been publicly harassed by her ex and over a period of time, the harassment has extended to Kanye West publicly harassing Kim Kardashian’s new boyfriend Pete Davidson.  Kanye West claims through his social media forums that he is simply trying to win Kim Kardashian back.  Yet, in one of his released music videos, Kanye West’s character chops off Pete Davidson’s head.

There is much debate in the public forum about whether we should feel sorry for Kim Kardashian who is seen as one of the most privileged celebrities of all time.  Yet what Trevor Noah rightly points out, is that the situation played out in social media between Kim Kardashian, Kanye West and Pete Davidson highlights the harassment that many women face when they try to leave a relationship.  Even Kim Kardashian, one of the most recognized and richest celebrities cannot escape the harassment.

To date, Kim Kardashian has not filed a Restraining Order against Kanye West, although this could be an option for her in the Los Angeles County Courts. In Hong Kong, if you are met with a similar situation, you can consider filing a Non-Molestation Order under the Domestic and Cohabitation Relationships Violence Ordinance.  It is important to note that in Hong Kong, domestic abuse orders are referred to as “non-molestation” orders.

The Domestic and Cohabitation Relationships Violence Ordinance applies if:

  • You are a person who has been molested by your spouse or former spouse
  • You are a person who has been molested by your partner or former partner in a cohabitation relationship, who is of opposite sex
  • You are a person who has been molested by a relative. A relative is defined in the Domestic and Cohabitation Relationships Violence Ordinance and should be clarified to see if the other party fits into the definition of “relative.”

A Non-Molestation Order remedy can be as follows:

  • A provision restraining the other party from molesting (abusing) you
  • A provision restraining the other party from molesting (abusing) a minor
  • Prohibiting the other party from entering or remaining in:
    1. Your residence
    2. A specified part of your residence; or
    3. A specified area whether or not your residence is in that area
  • A provision requiring the other party, where you reside with him/her, to permit you to enter and remain in the common residence or matrimonial home of you and the other party.

If you are granted a Non-Molestation Order you may want to discuss with your solicitor about also asking the Court to grant an order that the other party participate in a program aimed at changing the attitude and behaviour that lead to the injunction.

Importantly, you may also want to discuss with your solicitor about obtaining a variation/suspension of custody/access orders especially in cases where abuse/danger is present.

If you are involved in a situation where you are being abused and/or need to protect a minor in an abusive situation, it is imperative that you keep all documents in support of the abuse including text messages, photos and any other supporting information so you can submit this evidence to the Court in your application for a Non-Molestation Order.

As in the case of Kim Kardashian, domestic abuse does not always equal physical violence, it can involve emotional and psychological abuse which should be detailed to the Court if you are seeking a Non-Molestation Order.  Speak to your solicitor so he/she can assist you in obtaining the protection you may need.

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