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Notes for Income Sources

Attachment of Income Order Scheme - Notes for Income Sources

Introduction

Where the court is satisfied that a maintenance payer ("the payer") defaults in maintenance payment without reasonable excuse, the maintenance payee ("the payee") may apply to the court for an order to attach the payer's income (i.e. to deduct from the income and pay the amount deducted to the payee) to recover the arrears of maintenance and future maintenance payments.

2. Being the income source of the payer, you are obliged to provide the court and the payee with information regarding the income of the payer, and to comply with an AIO after it is issued by deducting a specified amount from the income and pay it to the payee direct.

3. The purpose of this booklet is to explain to you in simple terms the "Attachment of Income Orders", a measure through which maintenance payments can be collected. Though in this booklet we strive to give a precise explanation of the relevant laws and court procedures, the booklet itself has no legal effect. Should you have any queries, you should consult your solicitor or seek free legal advice from the Free Legal Advice Service of the Duty Lawyer Scheme.

What is an Attachment of Income Order?

4. An "Attachment of Income Order" ( "AIO" ) can be made by the court under the Guardianship of Minors Ordinance (Cap 13), the Separation and Maintenance Orders Ordinance (Cap 16) and the Matrimonial Proceedings and Property Ordinance (Cap 192).

5. An AIO will enable the payee to receive maintenance payment direct from you without contacting the payer. You, being the "income source" of the payer (such as employer, tenants, etc.), shall deduct from the income of the payer the amount specified in the AIO when each payment of income is due and pay the amount to the payee direct.

6. The amount to be attached, period of attachment and payment method are specified in an AIO. The amount to be attached is not confined to arrears of maintenance, but may also include future maintenance payments. Moreover, there are no legal restrictions on the payment methods. The court may order you to pay by bank transfer, cheque, cash or other means of payment.

In what circumstances will the court issue an AIO?

7. The law provides that the court may issue an AIO where :

  1. the payer has failed, without reasonable excuse, to make any payment in compliance with a maintenance order; and
  2. the payer has any income capable of being attached ("attachable income").

8. In order to determine whether the payer has failed to pay "without reasonable excuse", the court has to consider the reason for his default. Generally speaking, the payer would be presumed to have defaulted "without reasonable excuse" if he is able to pay but gives no explanation for his non-compliance with the maintenance order. The court has to consider the evidence given by the payer and the payee, and where necessary , the evidence provided by other people (such as you or other income sources of the payer) before it can decide whether the payer has failed, "without reasonable excuse", to make the payments.

9. The word "income" is very broad in meaning. Apart from salary and wages, it may also include rental receipts, company dividends, directors' emoluments and various kinds of income. Therefore, "income source" includes people like employers and tenants of the payer, as well as companies of which he is a shareholder or a director.

10. "Attachable income" has not been defined in law. Generally speaking, an "attachable income" should have an identifiable income source, e.g. a person, company or institution. Otherwise, the court will be unable to issue an AIO.

11. For example, if the payer is a property owner, the rental receipts may be treated as "attachable income" and the court may issue an AIO to the tenant. If the payer is a shareholder, then the dividends from the company may be treated as "attachable income" and the court may issue an AIO to the company. If the payer is a director of the company then the court may treat his emoluments as "attachable income" and the court may issue an AIO to the company.

What responsibility do I have during the AIO application?

12. After the payee has made an application to the court, the payer has to submit a "statement of means" in which details of his income and income sources must be disclosed. The court would order you to submit within 14 days a "statement of verification" to verify the contents of the annex which is relevant to you and to provide relevant information for the court to consider (e.g. any deductions made by you from the payer's wages in accordance with section 32(2) of the Employment Ordinance (Cap. 57)Note 1).

13. If you wish to address the court on any issue relating to the statement of means or the statement of verification, you may express such wish in the statement of verification and the court will inform you of the date and venue of the hearing. You must submit the statement of verification within the period mentioned in para. 12 no matter whether you are going to attend the hearing or not.

What should I do after an AIO is issued?

14. The court will make an AIO(s) where it is satisfied that it is appropriate to attach one or more of the payer's incomes. The payee has to serve the order on you and the payer either by personal service or by registered post. The order shall take effect on the commencement date specified in the order or 14 days after the date of service, whichever is later. Therefore, before the commencement date of the order, you are still liable to pay the income in full to the payer.

15. When an AIO becomes effective, you should comply with the order to pay the payee the amount specified in the AIO. Your liabilities towards the payer are discharged by your paying him the remaining amount. For example, the payer's income is $8,000 while the amount to be attached as specified in an AIO is $3,500. Then, before the income is paid to the payer, you have to deduct $3,500 and pay it direct to the payee. You are liable to pay the payer the remaining $4,500 only.

16. However, you are not liable to pay any amount to the payer in the following circumstances :

  1. when the payer's income has dropped to such a level that it is insufficient to cover the amount specified in the AIO; or
  2. when you are an employer of the payer and, according to section 32 of the Employment Ordinance (Cap. 57), you are allowed to make deductions from his wages (such as recovering the cost of meals or accommodation provided for the employee) Note 2 and the balance after deduction is insufficient to pay the specified amount.

17. In the case of (a), you should pay the reduced income in full to the payee. For example, if the payer's income is $8,000 while the amount to be attached as specified in an AIO is $4,500, and if his income later drops to $4,000, you shall deduct the reduced income, i.e. $4,000, in full and pay it to the payee.

18. In the case of (b), you shall pay the payee the balance of the payer's wages in full after making the deduction so authorized under the Employment Ordinance. For example, the payer's income is $8,000, while the amount to be attached as specified in an AIO is $4,500, and the amount you may deduct under the Employment Ordinance is $4,000. Then, you may first deduct the $4,000 and pay the remaining sum of $4,000 in full to the payee. By doing so, you will be regarded to have complied with the AIO.

19. In the case of either (a) or (b), you are not required to pay any amount to the payer. You should, however, inform the payer and the payee of the reasons why you cannot pay the amount specified in the AIO and of the actual amount that has already been paid to the payee.

What should I do when I am no longer the income source of the payer?

20. If you have never been or have ceased to be an income source of the payer prior to receipt of the order to verify the statement of means, you should notify the court in the specified form (Annex) within seven days of the date of that order.

21. If you have ceased to be an income source of the payer prior to receipt of the AIO, you should notify the court and the payee in the specified form (Annex) within seven days of the cessation.

22. If you cease to be an income source of the payer at any time when the AIO is in force, you should notify the court and the payee in the specified form (Annex) within seven days of the cessation. The court may, on its own motion, make an order discharging the AIO upon receipt of your notification.

What happen if I refuse to cooperate with the court?

23. You commit an offence and are liable to a fine if you fail, without reasonable excuse, to comply with an order of the court, or knowingly provide false information to the court.

Note 1 According to section 32(2) of the Employment Ordinance (Cap. 57), an employer may make deduction for : absence from work; damage to or loss of goods, equipment or property of the employer; recovery of any advance or over-payment of wages; meals and accommodation provided by the employer; contributions paid by the employer for medical benefit scheme, superannuation scheme, retirement scheme or thrift scheme; any loan made by the employer to the employee; and other deductions which are required or authorized under any enactment to be made from the wages of an employee.

Note 2 If the deduction made by you from the maintenance payer's wages in accordance with section 32(2) of the Employment Ordinance (Cap. 57) together with the deduction specified in the AIO exceed the whole wages payable to the maintenance payer in respect of that wage period, then you shall have the priority to make the deduction under the Employment Ordinance - section 32(3) of the Employment Ordinance refers.