Provisional Legislative Council

PLC Paper No. CB(2) 1245

Ref. : CB2/SS/10/97

Paper for the House Committee Meeting
on 20 March 1998

Report of the Subcommittee on Attachment of Income Order Rules

Purpose

This paper reports on the deliberations of the Subcommittee on Attachment of Income Order Rules.

Background

2.The Marriage and Children (Miscellaneous Amendments) Ordinance 1997 (69 of 1997) ("the Amendment Ordinance") was enacted on 27 June 1997 to amend the Guardianship of Minors Ordinance (Cap.13), the Separation and Maintenance Orders Ordinance (Cap. 16) and the Matrimonial Proceedings and Property Ordinance (Cap. 192) (MPPO) to provide for, inter alia, the court to make an Attachment of Income Order (AIO) where the court is satisfied that the maintenance payer has defaulted without reasonable excuse and has an attachable income. The Amendment Ordinance also empowers the Chief Justice to make rules to provide for court procedures concerning the application for AIOs and the enforcement of such orders.

The Rules

3.The Attachment of Income Order Rules (AIOR) were gazetted on 20 February 1998 and tabled in Council on 25 February 1998. The Rules provide for -

1. the AIOR to come into operation on the same day as the provisions of the Amendment Ordinance relating to AIO take effect;
   
   
2. the procedures of applying for and making of an AIO;
   
   
3. the obligations of an income source and the maintenance payer, and penalties for non-compliance;
   
   
4. the procedures for varying or discharging an AIO; and
   
   
5. statutory forms to be used in AIO proceedings.

The Subcommittee

4.Members decided at the House Committee meeting held on 27 February 1998 to form a subcommittee to study the Rules. Eleven Members joined the subcommittee and Hon CHAN Kam-lam was elected Chairman. The membership list of the subcommittee is in Appendix I. The subcommittee held three meetings at which members discussed the Rules in detail with the Administration and also listened to the views of two deputations.

5.A resolution to extend the scrutiny period of the Rules to 1 April 1998 was passed at the Council meeting on 18 March 1998.

Deliberations of the Subcommittee

6.Subcommittee members welcome the Rules which provide an additional channel for a maintenance payee to claim maintenance from the defaulting party. In scrutinizing the Rules, members have raised a number of issues and concerns, the deliberations on which are summarized in paragraphs 7 - 18 below.

Attachable Income

7.Members have enquired about the meaning of income as it is not specified in the Rules. The Administration explains that although income is not defined in the principal legislation, based on precedents, income is not confined to wages; bonus, rental, for example, are also regarded as income. Members have expressed concern that if the maintenance payer who has defaulted is self-employed or if his or her income source is not fixed, an AIO would not be applicable. The Administration stresses that although there are situations where an AIO cannot be used, other avenues are available to a maintenance payee for claiming maintenance.

8.In response to members' concern as to whether an AIO is enforceable on an income source outside Hong Kong, the Administration points out that there are practical difficulties in enforcement in such circumstances. However, the related documents could still be served on the maintenance payer according to his known address and on the income source if the latter has a registered office in Hong Kong.

9.The Administration informs members that an employer is required to make a deduction from the wages of his employee who is a maintenance payer pursuant to an attachment order. In the event that the employer is authorized under the Employment Ordinance to make a deduction from the wages of the same employee, the deduction due to the employer will have priority over the deduction made under an AIO. This is provided for in the principal legislation. The rationale being it would be unfair to the employer, who is an innocent third party, if it has to suffer loss in complying with an AIO. In response to a member's concern that the maintenance payer may have other financial obligations to meet, the Administration explains that under Rule 6, the court will have the discretion to determine to which income source or income sources an attachment order shall be directed.

10.Another member has expressed concern that if a maintenance payer has gone bankrupt, the relative claim of the maintenance payee on the income and assets of the maintenance payer vis-a-vis the claims of other creditors is not specified in existing legislation e.g. the Bankruptcy Ordinance. Members have noted that the matter falls outside the scope of AIOR.

Application for Attachment Order

11.Members have noted that an application for attachment order must be supported by an affidavit of the designated payee stating certain information, including "the name and address of the designated payee" under Rule 3(2)(a) and "the name and address of the income source and nature of the income" of the maintenance payer under Rule 3(2)(i).

12.Members are concerned that there are situations where a maintenance payee may wish to keep his or her address confidential, for example, if the maintenance payee has been a victim of abuse by the maintenance payer. Members have suggested that the maintenance payee be allowed to use another person's address and Rule 3(2)(a) be amended to this effect. The Administration disagrees on the ground that a third party should not be involved in an AIO application. Members do not accept the Administration's view and have decided that the subcommittee should move the amendment. As the maintenance payee's address is also required for an application for the variation of an attachment order under Rule 9(3)(a) and that for discharge of an attachment order under Rule 10 (3)(a), members agree that these two Rules should also be amended in the same manner.

13.Members are also concerned that an applicant may not have knowledge of the maintenance payer's income source and recommend that Rule 3(2)(i) be amended by adding the words "if known to the designated payee". The Administration advises that an applicant can still proceed despite the fact that he or she does not know the current income source of the maintenance payer. A statement to the above effect in an affidavit is acceptable and would not render an application for an AIO being rejected by the court. The Administration does not consider the words "if known to the designated payee" in Rule 3(2)(i) necessary. Members are of the view that the wording of the Rule should be as clear as possible to the prospective applicants. Members have decided that the subcommittee should move the amendment.

14.Referring to Rule 3(3), members have suggested that if a designated payee is allowed to serve a copy of the summons on the maintenance payer by mail, it should be so specified in the Rule. The Administration has responded that there is no need to amend the Rule since it does not specify personal service of summons, hence the copy may be sent by mail or other means. Members disagree and have decided that the subcommittee should move an amendment to state that a copy of the summons may be served by mail, for avoidance of doubt.

Variation of Attachment Order

15.A member has noted that under Rule 9(1)(b), the court may vary the related maintenance order upon application by the maintenance payer or the designated payee, or both. The member has queried why such a provision is necessary. The Administration explains that should an application to vary the related maintenance order be made in parallel with an application to vary an AIO, Rule 9(1)(b) enables the court to consider both applications at the same time. The Administration stresses that an AIO should reflect the assets and liabilities of both the payer and the payee.

Offences and Penalty

16.The Administration has explained that providing for certain offences is necessary to ensure compliance with the relevant court procedures and AIOs. Some members consider that the penalty of a level 2 fine ($2,000 - $5,000) and imprisonment for one month as stipulated in Rule 11(1) to be too light and query whether it could create any deterrent effect on the maintenance payer. The Administration points out the level is fixed according to the principles of proportionality to the severity of an offence. Members have noted that as the penalty is stipulated in accordance with that prescribed in the primary legislation, any amendment to increase the penalty is ultra vires, hence cannot be moved. Members request the Administration to review the adequacy of the penalty and amend the primary legislation if necessary.

Problems Encountered by Maintenance Payees in Recovering Alimony

17.Some members are of the view that there are still major deficiencies in the present channels available to maintenance payees for recovering arrears of maintenance. They urge the Administration to consider the setting up of an intermediary body for collecting maintenance as well as other additional avenues to assist maintenance payees in recovering alimony from defaulting maintenance payers. A member further suggests that a defaulting maintenance payer should be subject to restrictions on personal expenses similar to those applicable to a bankrupt person.

18.The Administration informs members that it intends to do a review, about a year after the operation of the legislation on AIO, to assess the effectiveness of such orders (including the level of penalty), and consider what, if any, other measures should be introduced to help maintenance payees.

Amendments

19.The amendments to be moved at the Council meeting on 1 April 1998 by Hon CHAN Kam-lam, Chairman of the subcommittee, as discussed in paragraphs 12, 13 and 14 above are set out in Appendix II.

Conclusion and Recommendations

20.The subcommittee recommends that the Rules be supported subject to the amendments to be moved by Hon CHAN Kam-lam, on behalf of the subcommittee.

21.The subcommittee also recommends that the issues and concerns discussed in paragraphs 10, 16 and 17 above which are outside the scope of this subsidiary legislation should be referred to and followed up by the Panel on Home Affairs.



Provisional Legislative Council Secretariat
19 March 1998

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Appendix I

Subcommittee on Attachment of
Income Order Rules

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Appendix II

INTERPRETATION AND GENERAL CLAUSES ORDINANCE

RESOLUTION

(Under section 34(2) of the Interpretation and
General Clauses Ordinance (Cap. 1))

ATTACHMENT OF INCOME ORDER RULES

RESOLVED that the Attachment of Income Order Rules, published as Legal Notice No. 118 of 1998, and laid on the table of the Provisional Legislative Council on 25 February 1998 , be amended-

1. in rule 3(2)(a), by repealing "the name and address of the designated payee" and substituting "the name of the designated payee, and his address for service of documents relating to the application";
   
   
2. in rule 3(2)(i), by adding "if known to the designated payee," before "the name and address";
   
   
3. in rule 3, by adding -
   
   

" (4) A copy referred to in paragraph (3) shall be served personally on the maintenance payer by the designated payee or his agent;

(5) A copy for service on a maintenance payer within the jurisdiction may, instead of being served personally on him, be served -

1. by sending by registered post to the maintenance payer at his usual or last known address; or
   
   
2. if there is a letter box for that address, by inserting through the letter box the copy enclosed in a sealed envelope addressed to the maintenance payer.
   
   

(6) Where a copy is served in accordance with paragraph (5), the date of service shall, unless the contrary is shown, be deemed to be the seventh day after the date on which the copy was sent to, or as the case may be, inserted through the letter box for, the address in question.";

4. in rule 9(3)(a), by repealing "the name and address of the designated payee" and substituting "the name of the designated payee, and his address for service of documents relating to the application"; and
   
   
5. in rule 10(3)(a), by repealing "the name and address of the designated payee" and substituting "the name of the designated payee, and his address for service of documents relating to the application".