Cwg v. Mh and Others

HCMP 643/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 643 OF 2012

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J U D G M E N T

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A. INTRODUCTION

1.The Applicant in these proceedings is applying for financial relief under the new Part II A of the Matrimonial Proceedings and Property Ordinance (“MPPO”) against her former husband, after a divorce was obtained by him in Thailand.

2.Although the parties are now divorced, for the sake of convenience, I shall refer to them as “the wife” and “the husband”, and together as “the spouses” in this judgment.  The husband’s mother is now the 2^nd respondent (“R2”), and the 3^rd respondent is a charitable foundation set up in Hong Kong called MVF.  The 4^th respondent (“WM”) is the half brother of the husband by the same mother R2.  The husband’s natural father is the 5^th respondent (“R5”), and the 6^th respondent is a company belonging to the 5^th respondent (“R6”).  The 7^th respondent (“BM”) is the husband’s sister by R5.  The reasons why these respondents were joined will be set out later in the judgment.

3.One of the major issues in these proceedings is whether the husband holds beneficial interest in various Hong Kong and offshore companies, but none of these companies had been joined as parties, save for MVF.

B.   BRIEF BACKGROUND

4.The wife was born in October 1960 and is now aged about 52.  She was brought up in Hong Kong.  She started working in the entertainment business since she was about 11 years old as a young star on television.  She continued with her formal education at the same time and after completion of her secondary schooling, further attended about two years at the then Baptist College for a Diploma Course on Communication, before giving up and devoting to her entertainment career.  At the time she met the husband, she was about 27 years old.  She had by then left the television station she was working for in Hong Kong, and was working freelance as an actress and performer in Taiwan and other parts of the world.

5.The husband was born in Hong Kong in May 1959 and now aged 54.  He has 3 siblings, his older brother WM, and two sisters, SM and BM.  He is from a well known family in Hong Kong and his mother R2 had connections with a corporation in Macau (“Macau Corporation”) of which her brother Mr H has major interests.  The husband left Hong Kong after attending Form 3 to continue his studies in San Francisco.  After completing secondary education, he attended college in San Francisco and obtained a Bachelor of Science in Business Administration in 1978.  He later obtained a Master Degree in International Management in 1979 from a graduate school in Arizona.  During the period when he was in the United States, he would return regularly to Hong Kong.

6.The husband told this court that after obtaining is Master Degree, he started to work for R2’s company Pyrenee Limited (“Pyrenee”) which was a Liberian company doing real estate business in the United States under the name of Pyrenee Estate Holding Limited.  Pyrenee was the owner of a building in San Franscisco called the “Medical Building”. According to the husband, he worked for Pyrenee until when he had to return to Hong Kong for a spine operation, which appeared to be round about 1984 or 1985[1]. He was hospitalized for about 3 months and has since remained residing in Hong Kong.

7.According to the husband, during his recuperation at home after his operation, he started to help R2 in carrying out foreign exchange/commodities/securities trading transactions (“Trading Activities”).

8.The spouses met in about 1987 and later decided to register their marriage in Thailand in March 1989.  The husband said they signed a pre-nuptial agreement which was valid under the Thai law.  The wife did not dispute signing an agreement, but denied that the terms and effect thereof were as described by the husband.  I will go into the details of the now missing agreement later in this judgment.

9.There are two children of the family, a daughter born in November 1993, now 19 (“the daughter”) and a son born in May 1997, now 15 (“the son”).  The daughter is now attending 1^st year at one of the universities here, and the son is attending Year 11 at an international school.  Both live with their mother.

10.The parties resided at various places after their marriage, including two flats at Estoril Court where the husband was living before the marriage (“Estoril Court Flats”).  These are two adjoining flats which were purchased before the marriage in the name of a Hong Kong company WS (HK) which the husband said was beneficially owned by R2.  The wife’s case was that her main matrimonial home was at the Estoril Court Flats.

11.It was also the wife’s case that not long after the marriage, she and the husband started their own businesses, and a number of companies were set up by them, most of them with the first two names bearing respectively the initials “A” and “C”.  I will be referring to this group of companies collectively as the AC Group.  Among the AC Group is a company which I shall call ACE.

12.In 1992 a flat at Grand Panorma on Robinson Road (“Grand Panorama Flat”) was purchased in the name of ACE.  The wife said that the Grand Panorama Flat was their extended matrimonial home. Subsequently, a number of units in a commercial/industrial block in Hunghom were also purchased under the name of ACE, for use as a business address for the AC Group and/or other companies and also it seems partly as a warehouse (“Hunghom Offices”).

13.After the purchase of the Grand Panorama Flat, the wife’s mother Madam Lai and the wife’s grandmother (“Grandmother”) moved in there.  Soon after the daughter was born, she was placed in the care of Madam Lai and the Grandmother at the Grand Panorama Flat.

14.The wife said that after the marriage, she was financially dependent on the husband.  She had helped the husband in his business activities, and she was involved in promoting public welfare in community and charitable activities which were non-profit making.

15.As mentioned earlier, at the time when the spouses met, the husband said he was helping R2 in Trading Activities.  By reason of these Trading Activities, he would spend most of his time, or rather most of his night time until about 3 or 4 am in the offices of a commodities firm called XXX, and the wife would accompany him.  The Trading Activities he carried out at XXX was initially on behalf of Pyrenee, which account was opened in about May 1985[2], and he later opened an account in his personal name in about September 1988[3].

16.The husband’s only work at that time was carrying out these Trading Activities. This continued after the marriage until the husband’s dispute with XXX in about middle of 1990.  His relationship with XXX would end in a long litigation commenced by him in 1991 against the firm and two of its account executives. The trial eventually took place in 1994 in Hong Kong lasting about 66 days and resulted in a judgment in June 1994 by Rogers J, as he then was (“XXX Judgment”)[4]. The husband lost and had to pay about HK$23m to XXX, and his appeal was unsuccessful. The husband subsequently launched further litigation against XXX in the United States over damage claims arising from allegedly fraudulent Trading Activities which occurred in Hong Kong, but failed in such claims.[5]  The husband then filed another claim as President of Pyrenee against XXX, and this was described as a “second bite at the apple”, and was also dismissed[6] on grounds of forum non conveniens.

17.Turning back to the marriage, according to the husband the spouses ceased having any sexual relationship in about 1993, after the daughter was born, and later resumed only in about 1996 in order to try and have another child.  They then ceased sexual relationship altogether after the son was conceived and the parties started sleeping in separate bedrooms since about 1997.

18.The wife’s own case was that in about 1998 she started to travel frequently to Beijing for acupuncture treatment of a tumour which she said she developed after the son’s birth, and also to do business on behalf of the husband. Later, a flat in Beijing was rented for her use (“Beijing Flat”). She was then commuting between Hong Kong and Beijing.

19.At the time of the spouses’ marriage until about February 2002, R2 was working at the Macau Corporation and mainly living in Macau, but she would return to Hong Kong from time to time.  In February 2002, after giving up her Portuguese passport and citizenship, R2 moved back to Hong Kong to take up residence here permanently. Thereafter, according to the husband, her main residence was at Estoril Court Flats, but she also stayed at various places, including later a rented flat on Old Peak Road (“Old Peak Flat”).  The wife said the husband had asked her to stay with his mother, which she did from time to time.  The wife described her life then becoming very hectic and extremely busy, as when in Hong Kong, she had to spend her time moving between 3 residences, namely the Grand Panorama Flat, the Estoril Court Flats and the Old Peak Flat[7].

20.The turning point in the spouses’ marital relationship came around on or about 10 August 2004.  On that day, in the evening, there was an incident at the Estoril Court Flats (“Incident”).  It was the wife’s allegation that during that evening she confronted the husband about his extra-marital affairs upon which the husband became emotional and locked her in a bedroom trying to strangle her.  This was denied by the husband. 

21.After the Incident, the wife ceased sleeping overnight at the Estoril Court Flats. The wife maintained, however, that she did not move out as all her belongings remained at the Estoril Court Flats, and that she would return there frequently. I will go further into these issues later in this judgment. Suffice to say at this point, notwithstanding the alleged strangling, the spouses’ relationship appeared to be still amicable.

22.Their relationship only started to deteriorate in about late 2008/early 2009.  In about April/May 2009, the husband requested the wife to hand over the official chops of  a company in Beijing under the AC Group, AC Beijing, which was a shareholder of a joint venture company set up in Beijing called Copia for the purpose of applying for an auctioneer’s licence there.  The husband said the wife failed to hand these over and later in October 2009, through a Beijing lawyer, the husband obtained certain documents filed with the authorities in Beijing by AC Beijing and/or Copia.  He then alleged that his signatures on some of those documents were “forged” by the wife.

23.On about 15 October 2009, when the wife and her mother Madam Lai returned to Hong Kong from Beijing, the wife was told by the driver Mr Au who went to pick her up that she was no longer allowed by the husband to return to the Estoril Court Flats or the husband’s mother’s residence at Old Peak Flat, or the Hunghom Offices. The husband’s explanation was that all this was on his mother’s instructions, as R2 was upset over the wife’s alleged forgery. 

24.To cut the long story short, all this led to the wife to issue a petition for divorce on 20 November 2009 (“1^st Proceedings”).

C.   THE PROCEEDINGS

25.The wife’s first divorce petition was based on the husband’s unreasonable behavior[8]. He did not respond to the 1^st Proceedings initially and only applied for leave to file an answer out of time about 6 months later upon receiving notice of the date of the decree nisi.  Eventually, the wife agreed to wait until after the parties had lived apart for one year, which according to her  at that time commenced on about 15 October 2009.  With the consent of the husband, the 1^st Proceedings were then stayed.

26.During the 1^st Proceedings, the wife had obtained initially an urgent order in February 2010 for “interim” interim maintenance under which the husband had to pay her HK$260,000 per month from 1 March 2010 onwards[9], plus the husband’s various undertakings to continue to pay the children’s school fees and various expenses (“Undertakings”).  Later, the amount of interim maintenance was increased to HK $323,000 per month with effect from 1 September 2010 onwards[10], in addition to the Undertakings (“MPS Order”).

27.Unbeknown to the wife at the time, shortly after she issued the 1^st Proceedings, the husband issued divorce proceedings in Thailand where they were married.  This was apparently not disclosed to the wife nor her legal representatives until he filed his 1^st affirmation in May 2010 in support of his application for extension of time to file his answer.  Although he referred to the Thai proceedings, the husband did not exhibit any documents in relation to those proceedings in his 1^st affirmation.

28.It was also in about May 2010 that the husband launched a series of litigations against the wife in Beijing (“Beijing Litigations”) over the alleged forged documents.

29.Around the middle of December 2010, the husband filed his 5^th affirmation exhibiting a copy of the Thai Divorce Order which seemed to have been obtained by him by way of default judgment on 4 October 2010[11].  The Thai Court did not make any order in relation to custody of the children nor did it make any financial orders.

30.When the wife saw the Thai Divorce Order, she immediately filed a petition in Thailand on 23 December 2010 requesting for a re-trial.  A day later, the wife issued her 2^nd divorce petition in Hong Kong based on the parties’ separation for one year [12] (“2^nd Proceedings”).

31.The wife eventually obtained a sole custody, care and control order in respect of the children on 11 January 2011 in the 2^nd Proceedings, with supervised access to the husband[13]. She later also obtained a Decree Nisi of divorce on 10 March 2011.

32.Subsequently, the wife decided to accept the Thai Divorce Order and on 2 May 2011 withdrew her petition for re-trial.  She proceeded instead to apply for leave on an ex-parte basis to issue an application for financial relief under the new Part IIA of the MPPO, which came into effect about two months earlier.  Her application was made in October 2011[14], which she later obtained leave to withdraw due to some procedural irregularity and/or other reasons.  She later issued again another leave application on 21 December 2011[15]. Leave was eventually granted to her on 14 March 2012[16] and her Part IIA application was formally issued 5 days later, on 19 March 2012[17].

33.Shortly after the wife issued her initial leave application, on 1 November 2011, the husband had made an application for the recognition of the Thai Divorce Order and the dismissal of the wife’s 2^nd proceedings, together with the MPS Order[18]. On 14 March 2012 Poon J, when granting leave to the wife to issue her Part IIA application ordered that the 2^nd Proceedings be stayed, but ordered the continuance of the MPS Order.  Subsequently, on 20 March 2012, Poon J declared the recognition of the Thai Divorce Order on 20 March 2012 but the husband’s application for dismissal was adjourned sine die.

34.At the same time in November 2011, the husband unilaterally stopped complying with the MPS Order save for the Undertakings, and paying a sum of HK$40,000 per month.  He alleged he was unable to afford to pay the full sum ordered.  This then resulted in the wife issuing a judgment summons (“Judgment Summons”) in the following month.  The day before the hearing of the Judgment Summons before Poon J, the husband applied for a downward variation of the MPS Order (“Variation Summons”).  He also applied for leave to appeal out of time against the MPS Order.

35.Initially both the Variation Summons and the Judgment Summons were directed to be heard in open court, but the husband decided to appeal against this order as well.  The Court of Appeal later ruled that the Variation Summons should be heard in chambers.  Following this, Poon J then made an order on 4 June 2012, directing, among other things, that the husband’s Variation Summons be heard together with the wife’s main Part IIA Application, and the Judgment Summons be dealt with afterwards. On that day, Poon J also made a costs order against the husband which the husband again appealed.  The Court of Appeal subsequently replaced it with no order as to costs. 

36.The husband’s application to appeal out of time against the MPS Order was eventually dismissed by the Family Court, and the husband then sought leave from the Court of Appeal to appeal.  This application had not yet been disposed of.

37.The Judgment Summons, the Variation Summons and the appeals/attempted appeals were all peripheral to the main Part IIA Application, which was also “hotting up” during the same time.

38.Having discovered that the husband had disposed of shares held by him in various Hong Kong companies to offshore companies incorporated in the British Virgin Islands, the wife took out an application in April 2012 to set aside these dispositions under s 29AJ of MPPO (“Setting Aside Application”)[19], and to join R2 as a party to these proceedings.  The dispositions, with the exception of the husband’s shares in one company AC Oversea Nominee, all took place on 27 September 2010 (“Disposition Day”).  The disposition of his shares in AC Oversea Nominee took place about 6 months earlier, on 8 March 2010.

39.R2 was in fact not the transferee of the shares in the Setting Aside Application.  Instead the transferees were WS (BVI) nor AC Oversea (BVI) but for some reasons, the wife did not serve her application on these two companies at the time of the issue of her application, which was required under the procedural rules. It was only after this court’s enquiry on this matter during the Pre Trial Review (“PTR”) that the wife decided to serve these two companies with her application.  Anyway, neither company had applied to intervene.

40.At this stage, I would also mention that one of the issues raised by the wife in relation to the husband’s assets is his alleged beneficial interest, through various corporate vehicles, in 6,251 shares in the Macau Corporation and 45,050 shares in another Hong Kong company which I shall call ST Shipping, also controlled by Mr H.  

41.There was no dispute that R2 was originally the registered shareholder of 6,251 shares in the Macau Corporation and also the shares in ST Shipping.  R2 later purported to transfer all the shares held in her name to an offshore company MVI (Panama) in 1983.  Then, in June 2005, MVI (Panama) by a deed of gift gifted 6,000 out of the 6,251 shares in the Macau Corporation to MVF, namely R3 herein (“Deed of Gift”).

42.The Macau Corporation refused to register the 1983 transfer of the 6,251 shares to MVI (Panama) and this eventually led to various litigations in Macau and Hong Kong between Mr H and R2.  Further, the husband’s older brother WM and sister AM (later AM was substituted by the other sister BM) also issued proceedings in Macau against MVI (Panama) and its shareholder MVI (HK), R2 and the husband seeking a declaration that the transfer of the 6,251 shares from R2 to  MVI (Panama) to be declared null and void[20] (“WM Litigation”).  Then in 2011 the husband’s father R5 and his company R6 issued proceedings in Hong Kong against R2, MVI (Panama), and the husband to claim that the 6,251 shares and the 40,450 shares in the ST Shipping in fact were held in trust for R5 by R2 and MVI (Panama)[21] (“HC Action”).

43.Without further going into details at this stage, it is the wife’s case that the husband held/holds beneficial interest and/or had/has the control of MVI (HK), the holding company of MVI (Panama), and also MVF.  As a result of these allegations of the wife, the husband applied for and obtained leave to join MVF, WM, his father R5 and R5’s company R6, and his sister BM as parties in these proceedings.  MVF and WM were joined on 21 May 2012[22], and the rest were joined on 29 June 2012[23]. BM was not legally represented and so far had not taken part in these proceedings at all.

44.One of the wife’s complaints in these proceedings was that the husband had failed to provide full and frank financial disclosure, and she then applied for leave to issue a number of subpoenae, which were granted.

45.After R2 has been joined, the wife also issued a summons for discovery against her. Later, on 10 August 2012, R2 attempted to apply to set aside her joinder, and also the subpoenae, but R2’s application was dismissed by Poon J, who further ordered R2 to file an affirmation to answer the wife’s questions and to provide the documents sought by the wife.

46.At the Pre-Trial Review, after submissions of those representing the R4 to R7, this court directed that evidence on the issue of the beneficial interest of the 6,251 shares should be heard first, so that thereafter the R4 to R7 could be released from attending the rest of the trial.

47.Notwithstanding this direction, on the 1^st day of this trial, Counsel for R5 and R6, Mr Westbrook SC, submitted, among other things, that this court should in fact bring forward the HC Action for trial first in order to adjudicate the beneficial ownership of the 6,251 shares before dealing with the wife’s Part IIA application, in view of the competing claims of the beneficial ownership of these shares.

48.After taking further instructions from the wife, her Counsel Mr Chow then informed this court that the wife decided that she would not be asking this court to make any determination on the beneficial ownership of the 6,251 shares, or the shares in ST Shipping, in the present proceedings, but would only ask this court to make findings on the beneficial ownership of MVI (HK) and MVF.  After this indication by the wife, there was no further need for the R4 to R7 to attend the rest of the trial.  There being no objection from the wife, the husband, R2 or R3, this court granted leave for R4 to R7 to be absent for the rest of the trial.

49.Having filed several affirmations, at the time of the commencement of the trial, R2 said she was unable to attend trial for cross–examination due to alleged health reasons. An application was made on her behalf for all her affirmations to be admitted notwithstanding her inability to attend trial for cross examination.  This was opposed by the wife, and this court eventually handed down a ruling refusing to admit R2’s affirmations unless she was to make herself available for cross examination, either in person or through video link.

50.To summarise, the applications this court now have to deal with are the wife’s main Part IIA Application, her Setting Aside Application and the husband’s Variation Summons.

51.Apart from these proceedings,  and those mentioned earlier, there were also two other separate actions in Hong Kong involving the wife, one issued by the husband against the wife for defamation, and one issued by R2 against the wife for return of 3 diamond rings of which 2 have since been returned. Both these actions are still outstanding.

52.In the meantime, there had been over 10 Beijing Litigations, including various appeals, instigated by the husband or a company which I will simply call BH Enterprises Ltd, which was controlled by one of the companies in the AC Group, AC International, against the wife and/or others[24].

53.After the commencement of the trial, there were 2 applications which resulted in written rulings being handed down by this court and they were:

(i) Ruling dated 16 October 2012, dismissing R2’s application for leave to adduce her affirmations and witness statement without attending the trial for cross-examination (“1^st Ruling”)

(ii) Ruling dated 14 November 2012, dismissing the wife’s application for the husband and/or R2 to produce originals of Offshore Minutes of 3 Offshore Companies, and 4 Powers of Attorney (“4 P/As”) for inspection and forensic examination and leave to adduce handwriting expert evidence (“2^nd Ruling”).

D.   THE LAW

Generally on Part IIA applications

54.Part IIA of MPPO came into effect in March 2011.  Under this part, a court in Hong Kong now has power to make orders for financial relief for an applicant after a divorce outside Hong Kong, upon one of the jurisdictional requirements being satisfied[25] and upon leave being granted[26].

55.Before making an order for financial relief, the court, however, has a duty to consider whether Hong Kong is appropriate venue for the application.  S. 29AF of MPPO sets out as follows:

(1) Before making an order for financial relief, the court must consider whether in all the circumstances of the case it would be appropriate for the order to be made by a court in Hong Kong, and if the court is not satisfied that it would be appropriate, the court must dismiss the application.

(2) The court must in particular have regard to the following matters—

(a) the connection that the parties to the marriage have with Hong Kong;

(b) the connection that those parties have with the place where the marriage was dissolved or annulled or where they were legally separated;

(c) the connection that those parties have with any other place outside Hong Kong;

(d) any financial benefit that the applicant or a child of the family has received, or is likely to receive, in consequence of the divorce, annulment or legal separation, by virtue of any agreement or the operation of the law of a place outside Hong Kong;

(e) if an order has been made by a competent authority outside Hong Kong requiring the other party to the marriage to make any payment or transfer any property to, or for the benefit of, the applicant or a child of the family—

(i) the financial relief given by the order; and

(ii) the extent to which the order has been complied with or is likely to be complied with;

(f) any right that the applicant has, or has had, to apply for financial relief from the other party to the marriage under the law of any place outside Hong Kong and, if the applicant has not exercised that right, the reason for that;

(g) the availability of any property in Hong Kong in respect of which an order for financial relief in favour of the applicant may be made;

(h) the extent to which any order for financial relief is likely to be enforceable;

(i) the length of time that has elapsed since the date of the divorce, annulment or legal separation.

56.Upon being satisfied that Hong Kong is the appropriate venue, the court may make any one or more of the orders it could make as set out in sections 4, 5, and 6 of MPPO, as upon a decree absolute of divorce being obtained by a Hong Kong court[27]. As regards to the exercise of its discretionary powers in relation to a party to the marriage, the court must have regard to the conduct of the parties and all the circumstances of the case including all those matters set out in s. 7(1)(a)-(g) of MPPO, and in relation to a child of the family those matters set out in s. 7 (2)(a)-(e).[28] (“s 7 Exercise”).

57.S. 7(1) and (2) of MPPO sets out as follows:

“(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(a) the 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;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, 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) Without prejudice to subsection (3), it shall be the duty of the court in deciding whether to exercise its powers under section 5, 6 or 6A in relation to a child of the family and, if so, in what manner, to have regard to all the circumstances of the case including the following matters, that is to say-

(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; and so to exercise those powers as to place the child, so far as it is practicable and, having regard to the considerations mentioned in relation to the parties to the marriage in paragraphs (a) and (b) of subsection (1), just to do so, in the financial position in which the child would have been if the marriage had not broken down and each of those parties had properly discharged his or her financial obligations and responsibilities towards him.”

58.There is no dispute between the spouses that as in an ancillary relief application, the principles set out in LKW v DD[29] will apply to applications for financial relief under Part IIA.  Ribeiro PJ has set out in the case of LKW v DD 4 principles as to how the s 7 Exercise should be approached[30], namely:

(i) To arrive at a distribution of assets which is fair as between the parties;

(ii) The concept of fairness requires the refutation of any gender or role discrimination;

(iii) With a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative views on distribution against a “yardstick of equal division”, which should only be departed from good articulated reasons;

(iv) To reject minute retrospective investigations.

59.Ribeiro PJ has further set out 5 steps in achieving the above principles[31], and briefly they are as follows:

(i) Identification of the assets;

(ii) Assessing the parties’ financial needs;

(iii) Deciding to apply the sharing principle

(iv) Considering whether there are good reasons for departing from equal division;

Ÿ•  Source of assets as a material factor: assets indecently acquired/ unilateral assets,

Ÿ•  Financial Needs as a Material Factor

•Ÿ  Duration of Marriage as a material factor

•Ÿ  Contributions to the welfare of the family as a material factor

•Ÿ  Compensation as a material factor

(v) Deciding the Outcome

On s29 AJ of MPPO

60.So far as the Setting Aside Application is concerned, the court has the power under s 29 AJ (3) of MPPO, if it is satisfied that the other party to the marriage has with the intention of defeating the claim for financial relief made a disposition to which that sub section applies, to make an order setting aside the disposition.

61.For dispositions which took place less than 3 years before the date of the application,  under s 29 AJ (8), it is to be presumed, unless the contrary is shown, that the person who disposed of  the property did so  with the intention of defeating the applicant’s claim for financial relief (“s 29 AJ Presumption”).

62.With the above general principles in mind, I now turn to the present case.

E.   THE EVIDENCE

63.The wife had filed a total of no less than 51 affirmations by the end of the trial, of which no less than 39 affirmations were relevant to her present applications. 

64.The wife called 8 witnesses to support her case, namely:

Mr Cheung -	friend of the parties who signed a lease in the name of a company for the husband
Mr Leung -	whose former wife was a distant relative of the wife’s and used to work as a clerk for the solicitors firm CK Mok & Co
Madam Yu -	worked without pay for AC Beijing/Copia, who lives in Beijing
Mr Grover -	friend of the wife’s who lives in USA and godfather to the children, said to have assisted the husband in his dealing in classic cars.
Ms Ku -	friend of the wife’s who lives in USA and goddaughter of Madam Lai, said to have assisted the husband in his dealings in classic cars
Mr Ho -	friend who prepared a proposal for the wife’s application for a Macau gambling licence
Lily -	friend of the wife’s who had lent monies to her
Mr Tsang -	clerk working for the wife’s solicitors’ firm

65.The husband filed a total of no less than 30 affirmations, of which no less than 26 were relevant to the present applications.  He had called 6 witnesses:

Fely -	Filipina helper who worked for the R2 since 1984 and later the Spouses
Mr Au -	driver who had served the Spouses and R2 and her companies/companies’ staff since about June 1991and currently a ‘personal butler’ of R2
Ms Yau -	working for ACE since about 2006 and since about 2008, working for the 3 Foundations, including MVF
Ms Lo -	accounts clerk who worked for R2 and/or the companies since about 1994
Mr Lai -	chief clerk working for a solicitors firm of CK Mok & Co since 1992
Mr Seeger -	a US lawyer claimed to have carried out work for R2 and the 3 Offshore Companies since 1995

66.Apart from the spouses, R2 would have been an important and material witness, but she failed to attend trial to be cross examined, and her affirmations had not been admitted.  R2’s case was largely consistent with the husband’s case and her case was thus based on the evidence of the husband, his witnesses/their common witnesses.

F.   DEMEANOUR OF THE SPOUSES AND WITNESSES

67.The spouses attacked each other’s credibility, as a result of which they were respectively subjected to lengthy cross examination.  I have had ample opportunity to observe both of them when they were giving oral evidence.  I find neither of them an entirely reliable witness. 

68.The wife was in the witness box for about 16 days.  The wife did not require interpretation for any of her affirmations but she preferred to give her evidence in Cantonese.  Further, although she may not be as highly educated as the husband, she is no fool, and she is articulate.  There were often inconsistencies between what she said during the trial and what she had said in her affirmations.  Further what she said was often based on her subjective views and what she was allegedly told to her by the husband, and not supported by independent evidence. Her evidence must therefore be viewed in such light.

69.On the other hand, the husband is highly intelligent and is very experienced in litigating, having been involved in numerous litigations in the past 20 odd years.  He was in the witness box for about 18 days.  Although his English is very good in that he was educated abroad since Form 3, he also chose to give his evidence in Cantonese.  He was very cautious and guarded when giving evidence and often qualified his answers by words such as “I believe so...”, “according to my knowledge” and when being asked about matters relating to various companies and bank accounts, he would simply  asked the questions to be directed to Ms Lo, the accounts clerk. I find him evasive and I do not find him a reliable witness.

70.The wife’s witnesses were all her friends, and they were clearly on her side.  Having said this, generally speaking, I find most of them reliable witnesses. 

71.On the other hand, the husband’s witnesses were mostly employees of him and/or R2 through various company vehicles, or persons who had rendered services to them for a fee.  Their evidence must be viewed in such light.

72.Among the husband’s witnesses, Mr Seeger and Ms Lo were two important witnesses. 

73.Mr Seeger gave evidence by way of video link.  I find him an evasive witness and I will go into parts of his evidence in the judgment.

74.So far as Ms Lo was concerned, she was responsible for the accounting and book-keeping work for all the companies.  According to her, she started working for R2 in November 1994 as an accounts/book-keeping clerk.  There was no employment agreement at that time.  Her first employment contract was signed with AC International on 1 February 1995, and later on 1 August 1995, her ‘employer’ was changed to another company called RH Ltd, but there was no employment contract, and then in 2011, her ‘employer’ was changed to ACE.  I find her very loyal to R2, and I could understand the difficult position she was placed in. She was obviously under stress when giving evidence and had occasions remained silent when she was not able to answer the questions.  I also find her evidence confusing and as such not reliable.

75.For the avoidance of doubt, insofar as the matters set out in this judgment differ from the evidence of the husband or the wife this is because I have preferred the evidence of the other, or another witness, as I have had the chance of observing the demeanour of the spouses and their respective witnesses, or because I consider that the documents produced confirm my finding of fact. 

G.   WHETHER APPROPRIATE FOR AN ORDER FOR FINANCIAL RELIEF TO BE MADE BY A COURT IN HONG KONG

76.Under s 29 AF of MPPO, this court must first of all consider whether in all the circumstances of this case it would be appropriate for a financial order  to be made by a court in Hong Kong.

Connection with Hong Kong and/or Thailand and/or Other places

77.The wife was born and raised up in Hong Kong and had spent most of her life here.  As for the husband, apart from the time when he was receiving education in the United States, he had been living here.   The parties, however, chose to get married in Thailand.

78.The wife said this was because the husband did not want to marry in Hong Kong to avoid publicity and she then chose Thailand as she had always had “good feelings” for Thailand and her godparents lived there.   Thus these seemed to be the only connections the wife had with Thailand.  Apart from this, there was no sufficient evidence that either had any connection with Thailand at the time of their marriage.

79.The husband had said after business opportunities in Beijing had failed, R2 had asked him to look into business opportunities in Thailand.  He then had asked Mr Seeger to help.  He took a lease of a flat in Bangkok for one year commencing from 1 November 2009, at the time of his Thai Proceedings.  I am of the view that the flat was taken for the purpose of the Thai Proceedings since there was no evidence that the lease had been renewed.  The husband went to Bangkok only once to sign the lease and to meet with his Thai lawyer said to be introduced to him by Mr Seeger.  I am satisfied that the husband had no real connection with Thailand.

80.The husband left the United States in 1984/1985, over 29 years ago. Although the wife was travelling to Beijing quite frequently, there was no evidence that she had acquired permanent residence there.

81.I am satisfied that by comparison with the above jurisdictions, the spouses’ connection with Hong Kong was substantial and overwhelming.

Any financial benefit received by the wife or children or likely to receive in Thailand or any other places in consequence of the Thai divorce and/or any financial order made in the Thai Proceeding”

82.No financial order was made by the Thai Court, nor was there any custody order. There was no  financial benefit  received or likely to receive by the wife or the children in Thailand or any other places outside Hong Kong in consequence of the Thai divorce by virtue of any agreement or operation of the law. 

Any right for the wife to apply for financial relief under law of any place outside Hong Kong

83.According to a legal opinion obtained by the wife, the Thai Act on Conflict of Laws of Thailand states that the laws governing such issues are the laws of Hong Kong and that it is impractical and unreasonable for the wife to try and establish her case in the Thai Court for orders on child custody and financial relief and that it would be likely that the Thai Court would dismiss her case on these issues[32]. She had abandoned her application for a re-trial there, and there was no evidence of any further application made by either party in the Thai Proceedings.

84.In light of the above Thai legal opinion, even if  the wife had a right to apply for financial relief under the Thai laws,  I am satisfied that reasons have been shown as to why she had not exercised that right.  There was no evidence that the wife has, or has had such a right under the law of any other place outside Hong Kong.

Availability of any property in Hong Kong

85.There was no evidence that the parties had any assets or landed property in Thailand.  The disputed landed properties are in Hong Kong.

The extent to which an order is likely to be enforceable

86.As the husband is living in Hong Kong, any orders made against him will be enforceable against him in Hong Kong.

Time elapsed since the Thai divorce

87.The Thai Proceedings were parallel to the divorce proceedings in Hong Kong.  The wife made her Part IIA application about one year after the Thai Divorce Order, 6 months after our Part IIA came into effect. There was no undue delay.

Conclusion

88.Having considered the above and all the circumstances of this case, I am satisfied that it would be appropriate for an order for financial relief for the wife and the children to be made by this court in Hong Kong.

H.   THE MAIN ISSUES

89.The spouses had raised numerous issues in these proceedings.  At the commencement of the trial, I have asked Counsel for the respective spouses to submit a list of agreed issues in the form of a Scott schedule.  This was only submitted to this court almost at the conclusion of the trial on 12 December 2012 (“Joint List of Issues”).  There were a total of 20 issues listed (there being no item 17) but some of them could be dealt with under together.  Anyway, in my view, the main issues, incorporating those listed in the Joint List of Issues, were:

(i) The missing pre-nuptial agreement (#19);

(ii) The date of the spouses’ separation and their occupation of Estoril Court Flats and the Grand Panorama Flat (#20, #21);

(iii) The beneficial ownership of the spouses’ respective shares in various companies and the Setting Aside Application (#7, #8, #9. #10, #15, #16, #18)

(iv) The husband’s car collection and the Beijing car museum project (#12, #13);

(v) The husband’s collection of timepieces (#14)

(vi) The alleged trust accounts

(vii) The wife’s application for the Macau Gambling Licence, the 3 diamond rings and jewellery collection (# 2, #4)

(viii) The HK$1m gift/advance (#3)

(ix) The Beijing Litigation (#18)

(x) The husband’s income, earning capacity , property and/or financial resources (#1, #11);

(xi) The wife’s income, earning capacity, property and/or financial resources (#6)

(xii) The reasonable needs of the wife and the children(#5)

(xiii) The reasonable needs of the husband (#1)

(xiv) Other matters in the s 7 Exercise

I.   THE MISSING PRE-NUPTIAL AGREEMENT

90.It was the husband’s case that the wife had signed a pre-nuptial agreement, agreeing among other things that she would waive all claims against him for maintenance in case of a divorce.  Upon signing this agreement, the wife had received HK$3m which according to the husband was provided by R2.

91.The wife did not deny having signed an agreement before their marriage or that she received a sum of HK$3m from the husband before or at about the time she signed.  She, however, disputed the terms and the effect of the agreement as alleged by the husband.

92.The husband said it was in fact his mother who had requested the spouses to sign a pre-nuptial agreement.  He said his understanding and that of his mother’s had all along been that a pre-nuptial agreement would be recognized in Hong Kong, but then about two months before the marriage when he sought legal advice he was advised that by his then solicitor Mr Yeung of Szeto and Yeung that such agreement would not be upheld in Hong Kong.  He then asked his solicitors to make enquiries and found that a pre-nuptial agreement would be recognized in Thailand. 

93.It was not disputed that it was the wife who suggested Bangkok in Thailand as the place of marriage and that she was the one who made all the arrangements for the marriage[33]. The wife’s godparents were witnesses at the registration which took place at the marriage registry in Bangkok, and immediately thereafter, the parties flew back to Hong Kong.  The wife’s godmother had made a witness statement in relation to the registration and confirmed that neither she nor her husband had ever been shown a copy of the alleged agreement signed by the parties in relation to their property arrangement[34], but she did not attend the trial to give oral evidence.

94.The husband brought up the pre-nuptial agreement in his 1^st affirmation when he said the wife received a sum of HK$3m from him with money given to him by R2.  He said at that time that there were express terms in the agreement that the marriage and the agreement were to be governed by Thai law and the Thai Court had exclusive jurisdiction over the marriage and the agreement[35].

95.The wife did not disclose the signing of any agreement initially, but later admitted that she did receive a sum of HK$3m and claimed that the parties had signed only a ‘marriage agreement’, the essential term of which was that the HK$3m was paid to her in exchange of her agreeing not to work in the entertainment field after the marriage. She said she never agreed to give up her rights to claim for ancillary relief in case of a divorce.

96.Anyway, one night shortly before the parties’ marriage when they were at a Japanese restaurant, the husband’s solicitor Mr Yeung came to meet with them.  Mr Yeung came with a draft agreement which he had already prepared at the husband’s instructions.  According to the husband, Mr Yeung explained to the wife the contents of the draft.  The wife, on the other hand, said she trusted the husband and told Mr Yeung that there was no need to explain the contents of the draft to her.  The wife said she signed the agreement then and there in the restaurant.

97.The husband on the other hand said that it was only in the morning of their wedding day that the parties went to his solicitors’ office to sign the agreement.  The agreement was signed in duplicate, and the parties were each given a signed copy for safekeeping.  There was no evidence as to the number of witnesses present at the signing.  The husband said the HK$3m had already been paid to the wife a few days before the signing.  Immediately after the signing, on the same day, the parties flew to Thailand for the registration of their marriage, and they then returned to Hong Kong the same evening.

98.After their return, the husband said the wife gave him her signed copy for safe keeping.  Thus, both signed copies were kept by him and he said he kept them in a locked white cabinet at the Estoril Court Properties (“White Cabinet”) to which only he had a key. The wife’s version was after she signed the agreement at the Japanese restaurant, she had not kept any copies.

99.Then, one day in 2005, the husband said when he returned home, he saw the White Cabinet had been moved.  According to him, the wife had decided to move the White Cabinet, and had asked a locksmith to break open the lock, and that she took out all the contents before moving it.  She further told him that as he had kept the 2 signed copies of the Pre Nuptial Agreement for a number of years, it would be her turn to keep them.  As their relationship was good at that time, he did not object to this arrangement.  It was the husband’s case that the wife had deliberately hidden the signed copies of the agreement, which he had not seen again since then.

100.As for how the amount of HK$3m was arrived at, according to the wife, this was based on her then estimated income of about HK$1m a year.  The husband disagreed and said many factors were taken into consideration by his mother in arriving at this sum, including what the wife could buy with such a sum in hand, and at that time the wife had already quit television work in Hong Kong and also in Taiwan, and was already 28 and thus she her future working opportunities in the entertainment field were limited.  According to the husband, the wife was only making about HK$100,000 to HK$200,000 a year at the time. 

101.The husband further produced a copy of a newspaper article in the South China Morning Post on 19 February 2002[36] in relation to an interview given by the wife during which she disclosed that she had signed a pre-nuptial agreement to prove that she married the husband not for his background but out of love. In response, the wife had said in her 6^th affirmation that the interview was conducted in Cantonese and that she only mentioned to the reporter generally that she had signed an agreement and did not refer to it being a pre-nuptial agreement[37].  Apart from the SCMP article, the husband had referred to another press release back in about 2001 by the wife in which she had referred to a ‘marriage agreement’.[38]

102.The husband also produced two other documents to support what he said were the terms of the pre-nuptial agreement, one was a registration certificate dated 6 December 2001 of a company in Macau on which it was stated that the property ownership of the husband and the wife were “separate ownership” and also a letter of declaration dated 7 December 2001 from the wife to the Macau Authority in connection with her application for a gaming licence.  In this letter, she referred to a ‘marriage agreement’ which provided that all her personal properties assets and/or belongings from the date of her marriage were to remain separate and apart and independent form the husband. After these documents were produced, the wife responded by alleging that the signature on the document of 7 December 2001 was not her signature.

103.Then there was a final twist when a copy of the missing pre-nuptial agreement was suddenly alleged to be found.

104.The husband has said that after the wife started the 1^st Proceedings, he had made enquiries from Mr Seeger to see whether R2 had sent him a copy of the agreement by R2, but there was no news from Mr Seeger. Then suddenly out of the blue, the husband said Mr Seeger found the pre-nuptial agreement in June 2012 and then Mr Seeger mailed his only copy to the husband’s alleged new residential address at Tung Choi Street (“Tung Choi Flat”) and later the wife “stole” it from his letter box. 

105.This story began at a hearing on 14 June 2012 before Poon J.  Sometime prior to this hearing, the husband had said in his 22^nd affirmation that he had not been living in the Estoril Court Flats since November 2010 as R2 had been very upset by his divorce proceedings[39]. During the hearing, Poon J ordered him to disclose his new residential address to the court, and he gave the address of the Tung Choi Flat.  After the hearing, the wife decided to go to the building of the Tung Choi Flat, apparently trying to do some investigation on her own as to whether the husband had indeed moved there.  What she did not realize was that she was being followed by the driver Mr Au.  To cut the long story short, the wife was allegedly seen on the CCTV surveillance recording as having removed letters from the letter box of the Tung Choi Flat[40]. She was then accused by the husband of stealing his letters, which so happened, included the copy of the pre-nuptial agreement which Mr Seeger had suddenly found and was instructed to send to the Tung Choi Flat address. 

106.Mr Seeger gave evidence at the trial through video link and was questioned over this matter.  His evidence was that some time in the late 1990s, R2 had sent him an envelope allegedly containing a copy of the pre-nuptial agreement for safekeeping which he then put away in a personal file of R2’s.  Mr Seeger said he did not open the envelope nor read the contents inside.  He said he had assumed that it contained a pre-nuptial agreement as that was what was written on a label on the envelope.

107.Then sometime in late 2009/early 2010 he was contacted by the husband over the telephone and was asked to look for a copy of the pre-nuptial agreement in connection with his divorce proceedings, and he did so by contacting his archive companies.  Nothing came out of this, it seems, for about 2 to 3 years, and then suddenly he claimed the file was retrieved from the archive company by his staff in about May/June 2012.  Before the file was retrieved, according to Mr Seeger, in May 2012, Ms Lo, the accounts clerk, had sent him an email to inform him to send the pre-nuptial agreement to the Tung Choi Flat address.  His staff then sent it off with his letter dated 1 June 2012[41] (“1^st Letter”).  Mr Seeger claimed he then went travelling, and when he returned, he was told by his staff that the husband did not receive the package sent.  He then sent another letter dated 6 July 2012 to the husband at the Tung Choi Flat[42] (“2^nd Letter”).

108.During his evidence at the trial, what Mr Seeger said was after the file was retrieved from his archives by his staff, his staff then sent it off to the husband.  He did not open the file to see whether the document inside was intact.  He did not read what was inside the file.  Mr Seeger had said in a letter in connection with the offshore companies that his “Record Retention Policy” was only five years[43], but it seems in relation to this matter, this alleged file was found over more than 12 years after it was sent to him.

109.I have to say my impression of Mr Seeger is that he was being evasive when he was giving evidence over this matter.  I simply find it incredible that after about 2 or 3 years, Mr Seeger or his staff would suddenly find a file allegedly containing a copy of a pre-nuptial agreement and would simply send it off to the Tung Choi Flat without informing the husband first that the agreement had been found, and further, being an experienced lawyer of about 35 years, he would not even make a photocopy of whatever was allegedly sent, or instruct his staff to do so. 

110.In the 2^nd Letter, Mr Seeger had stated that he forwarded the only copy of the pre-nuptial agreement because the husband had not been an employee of the company AC Oversea (BVI) for some time and he was not a client of his law firm.  This was again inconsistent with his oral evidence.  He had said it was R2 who informed him that the document would be sent to him, and that upon receipt he had kept it in the personal file in the name of R2, which he then kept in safe custody in the archives.  According to Mr Seeger, all along R2 and her companies were his clients and further he was R2’s attorney under the 4 P/As and thus one would have thought he should keep copies of documents sent to him by or on instructions of his client R2, unless he was specifically instructed not to do so.

111.Mr Seeger knew full well that the husband was involved in divorce proceedings, and again one would have thought he should have known, as an experienced lawyer, a pre-nuptial agreement would be an important document.  There was evidence that other documents Mr Seeger sent to the Hunghom Office would be sent by courier, and yet this package seemed to be simply posted by ordinary mail, not even by registered mail to a completely new address which he said was given to him by Ms Lo.

112.In any event, Mr Seeger’s evidence was also inconsistent with that of Ms Lo’s. Ms Lo had attended trial to give oral evidence.  According to her, she very rarely communicated with Mr Seeger.  When she was first asked how Mr Seeger was informed of the Tung Choi Flat address, she had initially said she was instructed by the husband in May 2012 to send a simple email to Mr Seeger to ask him to send the envelope to the Tung Choi Flat address.  Ms Lo was then asked to produce a copy of her email to Mr Seeger after the adjournment over the weekend.

113.Instead of producing a copy of any email to Mr Seeger, she produced 3 different documents, a letter dated 1 May 2012 from the husband to Mr Seeger, requesting him to take down the Tung Choi Flat address, an email sent on 3 July 2012 from the email address of FL, the daughter of Ms Lo who was also her assistant, of the same contents as the letter from the husband, and a copy of an express delivery record of a package to Mr Seeger dated 2 May 2012[44].

114.Ms Lo further changed her evidence and explained that there had been no email sent to Mr Seeger by her in May 2012 informing him of the Tung Choi Flat address.  There was only the above letter from the husband.  Ms Lo claimed that this letter of 1 May 2012 from the husband was in fact sent as part of a package containing a document to Mr Seeger by express delivery on 2 May 2012.  Then on 3 July 2012, an email was apparently sent from FL’s email address to Mr Seeger, of the same contents as the letter from the husband.  There was no mention by Mr Seeger at all of receiving this package containing the letter from the husband with the Tung Choi Flat address which was sent to him on 2 May 2012.

115.During the trial, the husband had himself said when he moved out from the Estoril Court Flats, he rented a flat in Sai Ying Pun from end of 2010 until August 2012, at a rental of HK$17,000 per month and it was thereafter he rented the Tung Choi Flat for HK$9,000 per month.[45] The husband did not disclose any payment of rent of HK$17,000 per month in his 1^st Form E filed in April 2010.  There was no mention of him having to move out of the Estoril Court Flats during end of 2010 or that he was living at the Tung Choi Flat in his 12^th affirmation filed in March 2012 in support of his downward variation of the MPS Order.  I find that there was simply no sufficient evidence that the husband had moved to reside in the Tung Choi Flat as claimed by him.

116.In any event, I reject the whole story about the alleged finding by Mr Seeger of a copy of the pre nuptial agreement and then sending the only copy to the Tung Choi Flat address, which was then allegedly stolen by the wife.  I do not find there was sufficient evidence that there was indeed a pre-nuptial agreement contained in the envelope allegedly sent with the 1^st Letter to the Tung Choi Flat address.  

117.Having said the above, there was no dispute that an agreement was signed by the parties before their marriage although no copy had been produced.

118.Historically until recently, it was regarded that it would be contrary to public policy for a couple who were about to be married to make an agreement that provided for the contingency that they might separate.  This old rule was finally found to be obsolete and swept away in England &Wales in October 2010 by a landmark Supreme Court decision of Radmacher v Granatino[46].

119.As said in Radmacher [47]: a court when considering the grant of ancillary relief is not obliged to give effect to nuptial agreements – whether they are ante-nuptial or post-nuptial. The parties cannot, by agreement, oust the jurisdiction of the court.  The court must, however, give appropriate weight to such an agreement.  A prior agreement between husband and wife is only one of the matters to which the court will have regard[48].

120.In Radmacher, the Supreme Court considered the principles to be applied by the court when considering the weight that should be attached to an ante-nuptial agreement. They considered that regardless of the contractual status of the agreement, the ancillary relief court should apply the same principles when considering ante-nuptial agreements as it applies to post-nuptial agreements[49].

121.The Supreme Court had referred to a consultation document published by the Home Office in England in 1998 on whether couple should be allowed to make written agreements whether before or after their marriage dealing with their financial affairs which would be legally binding on their divorce, and the proposed 6 safeguards[50]. Briefly, such safeguards included whether there is a child of the family, whether agreement enforceable under general law of contract, whether one or both received independent legal advice, whether enforcement would cause significant injustice, whether full disclosure of assets made, whether agreement made less than 21 days before the marriage.

122.As pointed out by the Supreme Court, these safeguards had not yet been incorporated in legislation and there was no need for them in the current state of the law, but the Supreme Court considered that the Court of Appeal was correct in principle to ask whether there was any material lack of disclosure, information or advice[51].

123.According to the Supreme Court, what is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end[52]. The court will be looking first for a clear indication that the parties intended a divorce court to give effect to their agreement, and that the court should also take into account the parties’ understanding as to the legal effect of their agreement[53].

124.In the Radmacher case, the agreement concerned had a German law clause, and the Supreme Court has said that when dealing with agreements concluded in the past, foreign elements such as those in that case may bear on the important question of whether or not the parties intended their agreement to be effective[54].

125.Finally, the Supreme Court further put forward the principle of fairness as follows:

“The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.[55]

126.It is clear that in carrying out the s 7 Exercise, the existence of any pre-nuptial, or indeed any marriage agreement whether pre-nuptial or post-nuptial, will be one of the circumstances the court shall have regard to, and the weight attached to such an agreement will depend on the circumstances of each case.

127.Turning back to the facts of the present case, no signed copy of the signed agreement was produced.  The husband did not produce any statement or affirmation from his solicitor Mr Yeung who prepared the draft or who witnessed the signing.  The exact terms of the signed agreement were thus unknown to this court.  If the signed agreement were to contain only those terms as alleged by the wife, it would not have been void against any public policy under the Hong Kong law, and there would also be no necessity to rush and sign it before the marriage.  HK$3m was not a small sum of money in 1989 which the husband said was enough to buy a property in those days.  Although the wife had produced some newspapers cuttings and various contracts in relation to her then career, I find there was no sufficient evidence that she was indeed earning about HK$1m a year before her marriage in 1989.

128.On the other hand, when the husband first mentioned the agreement, the only term he mentioned was that upon receiving HK$3m, the wife would waive her rights to claim any maintenance upon a divorce.  Then, later on, he claimed that the Filipina helper Fely had found further documents including those documents for the Macau Authority mentioned earlier, and his case then seemed to be that the agreement contained a ‘separate property’ clause , instead of a waiver clause. The husband even went to the extent to seek a Portuguese lawyer’s advice as to the meaning and effect of ‘separate property’ under Portuguese law, and according to this Portuguese lawyer, under the Portuguese law, a ‘separate property’ clause would have the same effect as a waiver of rights to make financial claims.  Then, during the trial, the husband further added that there was also a term in the agreement that he would be responsible for maintaining any children.  There seemed to be no mention of this term in his earlier affirmations.

129.According to the husband, the agreement also had a provision that it was to be governed by Thai law.  There was no evidence that the husband or the wife had obtained any proper Thai legal advice on the agreement at the time of their signing. The husband merely said that his solicitor in Hong Kong did a simple check and that the agreement would be recognized under the Thai law.

130.Having considered the parties’ evidence in relation to this issue, I find that the terms of the agreement signed by the parties were unclear and uncertain and there was no sufficient evidence to support the claim of the husband that the terms of the agreement were indeed of the effect that the wife had waived her right to make any financial claims from him in consideration of the HK$3m.

131.The draft of the agreement was prepared by the husband’s solicitor Mr Yeung[56]. Even though the wife said she had asked  Mr Leung, who was then working as a clerk at the law firm CK Mok & Co, according to her the terms of the agreement which she asked Mr Leung were quite different from those put forward by the husband.  In any event, it was clear that Mr Yeung was instructed by the husband, and I find there was no sufficient evidence that the wife had received any proper independent legal advice from a lawyer in Hong Kong in relation to the effect of a pre-nuptial agreement containing the terms alleged by the husband under Hong Kong Law.

132.The wife had produced a copy of the Thai Act on Conflict of Laws[57] in her 14^th affirmation.  In particular, section 25 thereof states the law which governs the essential elements and effects of an ante-nuptial agreement, and in respect of immovable property, the law of the place where it is situated shall govern.  There was no evidence that he wife had received any independent legal advice from any Thai lawyer in relation to the terms and effect of the agreement under Thai law prior to her signing.

133.The husband claimed that before the signing of the agreement, he had told the wife about his financial position[58]. He further said during the trial that he had told the wife that many of R2’s businesses were held in his name, and these included the trading accounts at XXX and 4 apartments in Canada, and further his name would be used by R2 in future businesses.  In relation to the payment of the HK$3m, the husband had initially said that the cheque was drawn upon his bank account[59], and the wife admitted receiving a cheque from him.  The husband now claims that the HK$3m in fact came from R2, as his case is now everything was and is R2’s.

134.The husband admitted that he could not recall whether there was any reference in the agreement in respect of him holding any businesses or assets for R2.  Proper mutual financial disclosure at the time of the signing of the agreement would be important.  I find that it was not at all clear as to the extent of the financial disclosure the husband claimed to have made to the wife prior to the signing of the agreement.  I do not find that there was sufficient evidence that the parties had made any proper or full disclosure of their finances prior to their signing the agreement, and indeed on their memorandum annexed to their marriage certificate clearly stated that the couple did not wish to have the assets recorded down[60].

135.I thus find that there was a material lack of disclosure, information and advice given to the wife before she signed the agreement.

136.Finally, in the legal opinion mentioned above, the Thai lawyer stated that under section 1466 of the Civil and Commercial Code of Thailand Book V regarding Family Laws an ante-nuptial agreement would be void if the agreement was not annexed to the marriage certificate or if the terms were not entered in the marriage register at the time of marriage registration[61]. The agreement also had to be signed by at least two witnesses. There was no sufficient evidence that all these requirements had been complied with at the time of the registration of the marriage.

137.Having considered all the circumstances of this case, even if the missing agreement did contain those terms as alleged by the husband, for the reasons set out above, I am of the view that the wife is not precluded by the terms therein to make the present application.  I will give no weight to this agreement save to the extent that the wife did receive a sum of HK$3m at the time of the marriage.

J.   THE DATE OF THE PARTIES’ SEPARATION

138.Under this heading, I will deal with a number of “sub-issues”, namely where did the parties live after their marriage, when did the parties start living apart, the duration of their marriage, and where was their matrimonial home.

139.According to s 11C of the Matrimonial Causes Ordinance, “a husband and wife shall be treated as living apart unless they are living with each other in the same household”.

Where did the parties live after their marriage

140.Prior to the marriage, the wife was residing with her parents in a flat in Mei Foo Sun Chuen.  The husband was residing with his siblings and R2 at a flat on Kennedy Road (“Kennedy Road Flat”) prior to the purchase of Unit D of the Estoril Court Flats in October 1983.  Thereafter, he, WM and R2 moved to Unit D, with each having a room there.  According to the husband, there was also one guest room reserved for his sister BM who was at that time in the United States. Unit C was only purchased at end of April 1987.

141.It seems that it was only after about a couple of months that the husband told R2 about his marriage to the wife in Thailand.  With R2’s blessing, the parties then held a wedding banquet in Hong Kong and thereafter, the wife moved into the Estoril Court Flats to live with the husband[62].

142.At the time of the spouses’ marriage, R2 was working for the Macau Corporation and it seems that she had  remarried and at one stage living in Pokfulam, although the husband said she would come and stay overnight at the Estoril Court Flats on occasions.  WM started to work for the Macau Corporation some time around the middle of 1980s but he would also come back to Hong Kong from time to time. Thus, it seems at the time of the marriage, both WM and R2 would return to Hong Kong from time to time and would stay at the Estoril Court Flats.

143.It was not disputed that sometime after the parties’ marriage, Estoril Court Flats had to undergo renovation.  According to the wife, the renovation commenced in 1989[63], but the husband said it was in 1992.  Anyway, it was the wife’s own case that after moving into the Estoril Court Flats for a short period of time after their marriage, she and the husband moved out to live in various luxury hotels and serviced apartments[64], one of which was at the Convention Apartments.  According to the husband, R2’s then husband was dying in hospital at the time, and she would sometimes stay with the spouses at their serviced apartment.

144.As mentioned earlier, in about September 1992, the Grand Panorama Flat was bought in the name of ACE.  After the purchase, the wife’s mother Madam Lai and the Grandmother moved in to live there.

145.The wife became pregnant with the daughter in 1993, and according to her, the husband decided to revise the then ongoing renovation plan of the Estoril Court Flats in order to accommodate the two families, his and WM’s.  The husband himself had said there was disagreement between the various siblings over the renovation plans, which were then put on hold in 1993.  The wife claimed that this was all part of the husband’s scheme to make WM move elsewhere, which was denied by the husband.  Whether it was a scheme or not, it seems that due to the slow progress of the renovations, WM eventually moved elsewhere in about 1994.  

146.It was not disputed that shortly after the daughter was born, the baby was taken to the Grand Panorama Flat to live there with Madam Lai and the Grandmother, while the wife and the husband continued to live in various serviced apartments, including the earlier mentioned apartment at the Convention Plaza. In fact, in 1993 a flat at the Convention Plaza was purchased by ACE but it was sold not long afterwards when a good offer was received.  This was a side issue, as it seems that the parties did not actually move into this purchased flat, and were living in another rented one in the same block.

147.According to the husband, ACE was always beneficially owned by R2 since its set up, and the Grand Panorama Flat was meant by R2 to be purchased for the parties to reside there and that was why the parties decided to convert the bedrooms in the Grand Panorama into one large connecting bedroom.  As Madam Lai and the Grandmother had moved in there, it was thus not possible for him to move in there as well, as there was not enough space for all of them.

148.The husband said he then discussed the situation with R2 who offered to assist by renting another flat in Estoril Court (“Flat 38 C”) for the spouses to live in while the renovations of the Estoril Court Flats were going on.  The wife made no mention of Flat 38C in her earlier affirmations, but it seems that she later did not dispute that the spouses did move to Flat 38C, followed shortly thereafter by Madam Lai, the Grandmother and the daughter. 

149.There was a complicated arrangement in relation to the taking of the lease of Flat 38C, which was owned by the ST Company, holding company of ST Shipping.  The wife said the lease had to be taken in the name of a company set up by a friend Mr Cheung and the reason for this arrangement was that the husband did not wish ST Company or WM to know that it was the husband who was renting Flat 38C.  The husband gave some other explanations and said it was R2 who did not want WM to know.  Mr Cheung had made an affirmation[65] on behalf of the wife and produced the tenancy agreements of Flat 38C which showed that the flat was initially rented for a two year period from 15 August 1995 to 14 August 1997, and later extended for a further two year period to 14 August 1999[66].  Mr Cheung further attended the trial to confirm the then arrangements.  I accept what Mr Cheung had said that it was the husband who told him that he wanted to rent that apartment.

150.The husband had told this court during the trial that on reflection the spouses’ separation started in 1993 but he did not see the reality at the time, and that the spouses started sleeping in separate bedrooms since about 1996.  His latest position was that he and the wife started living apart in 1996.

151.Notwithstanding what the husband said, the son was born in 1997, and at that time the husband was living with the wife, together with the children at Flat 38C, together with Madam Lai and the Grandmother.  They were all living as a family.  Whether the spouses were having sexual intercourse or occupying separate bedrooms or not, there was no evidence to show they were not living in the same household.  I thus I find no sufficient evidence that at that time that they were living apart.

152.According to the husband, the family stayed on at Flat 38C for a several more months after the expiration of the lease in August 1999 before all of them then moved to the Estoril Court Flats in late 2000[67], but this was not for long.

153.The husband had said the reason why everyone moved to the Estoril Court Flats was at that time the Grand Panorama Flat was undergoing repair and renovation due to water leakage, and after the renovation there was completed, Madam Lai and the Grandmother, and the children, then moved back to the Grand Panorama Flat, and according to the husband, the wife moved out with them as well.  Thus, his case was that only he remained residing at the Estoril Court Flats and according to his affirmations this was in 2000, but during the trial he said it was in 2001.

154.The wife’s case was that everyone resided in the Estoril Court Flats for about 3 years, from about 1998 to 2001[68].

155.According to Fely, she was working at Flat 38C from about 1998 for about 2 to 3 years, and later she also moved to Grand Panorama.  She had at first said this was around 2000, but later she said she could not exactly remember[69]. She said she was working at Grand Panorama for 5 years even though according to her employment contract, she was supposed to be working at the Estoril Court Flats. 

156.No doubt everyone’s memory became somewhat blurred with the passage of time.  Anyway, I find that everyone moved from Flat 38C to the Estoril Court Flats sometime in early 2000, and I find that it was probably some time in late 2000/early 2001 that Madam Lai, the Grandmother and the children moved back to the Grand Panorama Flat.

157.I accept what the wife had said, that this was at the husband’s request as he said he needed peace and quiet to concentrate on the various litigations he was becoming involved in at this time.  Although the husband claimed that the wife moved out as well, I accept what the wife had said, she did not, and she only went over to the Grand Panorama Flat regularly to care for the children.

158.By late 2001 the husband and R2 were involved in various disputes with Mr H, and also WM over R2’s shares in the Macau Corporation, and R2 was then planning to give up living in Macau.  She eventually moved back to live in Hong Kong permanently in about February 2002.  According to the wife, the husband did not want his mother to live at the Estoril Court Flats, and he arranged for R2 to stay at various other places until the Old Peak Flat was rented in 2004, and the wife said the husband had asked her to stay with R2 from time to time.

159.As mentioned earlier, not long after the birth of the son, the wife started travelling regularly to Beijing, for acupuncture treatment and for the husband’s businesses. Thus  it seems according to the wife’s own case, between 2001 and 2004, she was dividing her time between the Grand Panorama Flat, the Estoril Court Flats, or other rented residences of R2 including the Old Peak Flat,  and she was also travelling to Beijing.

160.In the Thai Divorce Judgment, the husband had stated that he and the wife started to voluntarily separate since 2002[70]. And later in his 30^th affirmation, he had mentioned it was in 2003[71]. Although the wife was shuttling between various places, I find there was no sufficient evidence that the parties were living apart between 2000/2001 and 2004.

The Incident

161.As mentioned earlier, the turning point came after the Incident on 10 August 2004. The parties gave different versions about the Incident. 

162.The wife claimed the husband was violent towards her and tried to strangle her, which he denied.  Fely also gave evidence about the Incident.  She claimed she was in the kitchen that evening when at about 10:45pm she heard a loud noise and  she came out of the kitchen and saw the wife screaming , and even throwing chairs on the floor.  Fely said she did not see the husband attempting to strangle the wife.  The husband told the wife to shut up but she shouted louder and later she left.  Thereafter, after about a week, the wife arranged for her personal belongings to be collected, on the 1^st occasion by the driver Mr Au only, and on the 2^nd occasion, both the wife and Mr Au came to collect more belongings.  Under cross-examination, Fely revealed that she had recorded the Incident in her diary or a “telephone-book-cum-diary” after the wife left. She was then told to bring this diary to the court.  She then brought 2 notebooks, a larger notebook[72] and a smaller note book, the size of a pocket diary[73].  On the smaller note book, the reference to the Incident on Tuesday 10 August was only “Mr & Mr Mak quarreled”, but in the larger notebook, there was a full page detailed account as to what happened on 10 August 2004.

163.Apart from the account about the Incident in the larger notebook, there was another 2 page account of other allegations against the wife.  These two accounts were very neatly written and in detail, compared to what Fely had jotted down elsewhere in that larger notebook, or the small notebook.  The distinct impression this court got from reading through these two notebooks was that Fely was deliberately writing down neatly those 3 pages of the larger notebook.  Her explanation as to why those 3 pages were neatly written was not convincing.  I do not find there was sufficient evidence that the one page account written down by Fely in the larger notebook about the Incident was a contemporaneous record. In any event, according to the wife, the Incident took place in the bedroom, and Fely only saw what happened in the sitting/dining room. 

164.The wife had said that she had told her godfather Mr So about the Incident, namely that the husband had tried to strangle her, and that Mr So had tried to mediate.  Mr So filed an affirmation on behalf the wife, but he was eventually not called to give evidence.  The wife was not an uneducated woman, and yet there was no report to the police by her, nor did she go for any medical examination.  The Incident took place more than 5 years before the wife eventually issued the 1^st Proceedings.  Having considered all the evidence, it appears to me that she could have exaggerated what had happened.  I find there was no sufficient evidence that the husband had attempted to strangle the wife, although I find there was indeed a quarrel between the spouses and the wife was upset by it.  In any event, even if there had been violence by the husband during the Incident, this was the only incident of violence alleged by the wife during the marriage, and in my view, it would have been an isolated incident.

Where did the parties start living apart

165.In Fely’s smaller notebook, she had, however, jotted down that about a week after the Incident, on 17 August and 21 August 2004, the wife had gone with the driver Mr Au to the Estoril Court Flats to collect her belongings and some documents.

166.The wife’s own case was that she and the husband agreed that after the Incident she should not return to sleep overnight at the Estoril Court Flats, but she seemed to maintain that Estoril Court Flats continued to be her matrimonial home as she said she would go there during the day time almost every day to ask the helpers there to do her laundry, and she would also collect her clothes and other personal items, and would have meetings with the husband there.

167.In her application to the Thai Court in December 2010 for a new trial the wife herself had stated that after the Incident she was unable to cohabit with the husband as a normal married couple, and the husband agreed to her moving out to the Grand Panorama Flat to live there with the children[74]. Further, in her 14^th affirmation, she said clearly that the marriage began to falter in or around 2004 and the parties separated in 2004[75]. In his Closing Submissions, Mr Chow, Counsel for the wife, suddenly submitted that what was written in her 14^th affirmation was a “typing error”. I find there was simply no evidence to support this being a typing error.

168.Notwithstanding what she had said earlier in her affirmations, or in the Thai proceedings, or in her 2^nd Petition, in the Joint List of Issues and in a letter dated 21 November 2012 sent by her solicitors to the husband’s solicitors containing her ‘Open Offer’[76], the wife suddenly put forward another yet another date, 20 November 2009, as being the separation date.  In her solicitors’ letter, she purported to rely on a ‘Certificate of Registered Particulars’ (“Certificate”)[77] “as evidence” to support her statement.  The Certificate stated the wife’s residential addresses as lodged with the Registration of Persons Office of the Immigration Department on the various dates stated thereon. 

169.According to the Certificate, the wife did not report the change of her residential address from the Mei Foo Flat to the Estoril Court Flats until end of 1990, almost 21 months after her marriage, and then on 12 June 1995, she reported a change of her residential address to the Hunghom Offices.  It was not until 23 July 2004 that she reported another change of her residential address back to the Estoril Court Flats.

170.What was stated on the Certificate was clearly inconsistent with the wife’s own evidence, whether in her various affirmations or during the trial as to the various places she and the husband lived after the marriage.  Further, there was no evidence at all that she ever resided at the Hunghom Offices between June 1995 and July 2004, which was what was stated on the Certificate.

171.The information on the Certificate was also inconsistent with the Notifications of her change of address of director filed in the Companies Registry in connection with ACE and other companies.  According to the Notification for ACE dated 3 January 2005 and signed by the wife, she reported her change of address from the Estoril Court Flats to the Grand Panorama Flat with effect from 28 November 1998[78]. Since then, there had been no further notifications to the Companies Registry of any change of her address back to the Estoril Court Flats, so far as ACE was concerned.

172.The issue was whether the spouses continued to live in the same household after the Incident.  Ms Remedios has referred this court to the case of Piper v Piper[79] where the parties separated in February 1970 but thereafter Mr Piper visited Mrs Piper frequently at her address spending weekends, sometimes several nights a week, and on three occasions a whole week with her.  Further, between January and May 1975 the parties lived continuously for 4½ months.  Mr Piper then applied for a divorce in 1978 alleging the parties had separated for a continuous period of 5 years and this was granted.  Mrs Piper appeal was dismissed.  The  question was whether the parties could be still living together due to Mr Piper’s visits, and Court of Appeal had said the question was what was the quality of the relationship between the couple after the separation in February 1970, as the starting point for considering that relationship must be the fact that in February 1970 the married life, as ordinarily understood, came to an end; the couple then separated and sold the house, and so the consortium at that time clearly came to an end.  The Court of Appeal  agreed with the finding of the trial judge that there was no ‘living together’ after the separation even though  the subsequent  visits  were frequent and sometimes sexual intercourse took place,  as Mr Piper only ‘visited’ his wife. Omrod LJ considered that during the period when Mr Piper was regularly visiting Mrs Piper and having intercourse with her, they could not even be said “to be living together leaving out the question of the same household.”

173.Turning back to the present case, on her own evidence, the wife was only returning to the Estoril Court Flats to change her clothes, and to have her laundry carried out by the helper there.  She also returned there to help the husband with his litigation. I do not find that what she said was sufficient to show that the parties had continued to live together in the same household after the Incident.

What was the duration of the marriage

174.The main issue in the case of Piper v Piper was whether Mr and Mrs Piper were still living together after their separation and the sale of their matrimonial home, or whether thereafter, Mr Piper was only ‘visiting’ his wife.

175.Often the commencement of living apart would signify the end of the marriage, but this may not necessarily be the case.  In the case of EJB v CJB[80] where the trial judge took the length of the marriage as six and a half years from the parties’ engagement to separation, and one of issues on appeal was whether a period of some nine months after the parties’ separation should be taken into account.  It was argued on behalf of the wife in that case a special relationship existed between the parties, which should be equated to a continuance of married life.  The finding of the trial judge was upheld by the Court of Appeal on firstly the wife had relied on the earlier date as the date of separation in her own petition and secondly, referring to what the Court of Final Appeal had said in WLK v TMC [81] that it would only be in highly exceptional cases ( such as where parties were unable to cohabit- because, for instance, they had high-powered jobs in different countries - but had children and otherwise generally conducted themselves as if they were married) where the absence of physical cohabitation would not stand in the way of treating them as in a de facto marital state, and there was no such exceptional circumstances in EJB v CJB[82].

176.The duration of the marriage was one of the issues in another appeal, Z and X and C Intervening[83]. In that case, the parties were physically together for 4 years since their marriage in 1982, but Saunders J, as he then was, had found that the marriage lasted 21½ years.  The Court of Appeal was of the view that Saunders J was clearly entitled to reach that finding based on the evidence, and his finding was thus upheld.

177.It is clear from the above cases that each case has to be decided on its own facts.

178.In the present case, although I find that the spouses started to live apart after the Incident, the wife was free to go in and out of the Estoril Court Flats until October 2009 when she was not allowed to return there anymore.

179.The wife’s evidence was supported in a way from notes jotted down by Fely in her smaller notebook.  According to Fely’s notes, it would appear that for the month of February 2005, about 6 months after the Incident, on 5 February 2005 the wife returned in the morning and stayed until 9:30pm that evening, on 24 February 2005 the wife returned asking many things about vitamins, on 26 February 2005, the wife went to get changed and went inside the room a few minutes, and on 27 February 2005, the wife went to get changed.  Although these notes only covered a short period of time, they did show that   although the wife did not return to the Estoril Court Flats to sleep overnight, she was going in and out of the Estoril Court Flats freely and frequently.  

180.More importantly, the husband had repeatedly said during the trial was that he did not have the intention to end the marriage notwithstanding the wife’s move to the Grand Panorama Flat[84]. In fact, the husband said even after the discovery of the wife’s alleged forgery of documents in relation to AC Beijing and/or Copia, he still had no intention to divorce her.  On the wife’s part, there was also no evidence that she wanted to end the marriage until she was prevented from returning to the Estoril Court Flats.

181.The relationship between the spouses was clearly a good one even after the Incident. Two foundations MVF and AC International Culture Studies Foundation were only acquired about a year ago in 2003.  The wife continued to meet with the husband and R2 regularly at the Estoril Court Flats, and had stayed with R2 at the Old Peak Flat.  The wife was working for MVF, and both of them were involved in various charitable events and activities of MVF.  The wife had further said she was helping the husband and R2 with their various litigations, which evidence I accept.  The husband and the wife were also involved in the setting up of AC Beijing in Beijing in September 2004 and other companies such as IS Ltd and Copia were set up in 2008 for the application for an auctioneer’s licence in Beijing.  The husband was the ‘legal representative’ of AC Beijing, which maintained an office in Beijing and a flat was rented in Beijing for the use of the wife and the children whenever they were there.

182.Thus, although the spouses were living apart since about 10 August 2004, I find that for that they continued to maintain their good relationship and their marriage until October 2009.  There was no evidence that their marriage had broken down irretrievably prior to October 2009.

183.The wife in her petition in the 2^nd Proceedings pleaded that the marriage had broken down irretrievably by reason of the fact that the spouses  had lived apart for a continuous period since on about  15 October 2009[85]. This was consented to by the husband.  On the Registrar’s Certificate for the pronouncement of the Decree Nisi, the Registrar had certified that the marriage had broken down irretrievably by reason of the parties living apart since about 15 October 2009, and the Decree Nisi was subsequently pronounced  accordingly. In my view, the facts of the present case can be distinguished from the facts of EJB v CJB, in that the wife’s petition in the 2^nd Proceedings did not rely on living apart since August 2004, and this was consented to by the husband, and further viewed objectively, I cannot say that their living apart in August 2004 was the definitive step that led to the dissolution of their marriage.  I thus find that the marriage had continued for a further 5 years, and thus for the s. 7 Exercise I find that the duration of the marriage was a total of 20 years.

Where was the spouses’ matrimonial home

184.It was not disputed that the husband had never lived at the Grand Panorama Flat although he said that he had gone there from time to time to see the children. I find that the Grand Panorama Flat had never been the spouses’ matrimonial home, whether main or extended.

185.To summarise, the spouses’ last matrimonial home was at the Estoril Court Flats.  It was their marital home for a short period after their marriage and then for about 4 or 5 years from about 1999/2000 to 2004, although I find that during those years, the Estoril Court Flats were not for their exclusive residence or use.

K.   THE BENEFICIAL OWNERSHIP OF VARIOUS COMPANIES

186.It is my finding that during the marriage the husband had spun a cobweb of companies, both Hong Kong and offshore, and that the husband had failed to make full and frank disclosure, in particular in relation to the offshore companies, and thus the identity of the “ultimate beneficial owner” of the offshore companies was withheld from the wife and this court.  It is further my finding that he held/holds beneficial interest in all of the relevant companies.  The reasons for my findings are set out hereafter.  I will also deal with the wife’s Setting Aside Application when dealing with the companies concerned.

187.According to the accounts clerk Ms Lo, none of the relevant companies carried on business activities, save for ACE, as there was a tenancy agreement with the husband in respect of the Grand Panorama Flat, at a monthly rental of HK$35,000. This agreement was dated only 11 February 2010, after the 1^st Proceedings had started, and there was no evidence of any rental being payable by the husband since the purchase of this property until then.  Mr Seeger had mentioned some “referral business” carried out by AC Oversea (BVI), but I do not find that this business was of any significance.

188.The first list of the companies produced by the husband was the one attached to his 1^st Form E and this was described as a schedule of the details of “his” shareholding/beneficial interest in 12 private companies, 11 in Hong Kong and 1 in PRC [86] (“1^st Companies List”), and a schedule of details of his various directorships [87].  Shortly thereafter, he  produced in his 2^nd affirmation another list of 19 companies of  which he said in the affirmation the wife or Madam Lai had served as directors previously or had/have nominal shareholding in trust for R2[88] (“2^nd Companies List”).  The heading of the 2^nd Companies List, however, bore words to the effect since the marriage between the spouses, “they have joined (sic) and/or each of them was and/or is still in his/her capacity as the director(s) and/or shareholder(s)”[89].  The 2^nd Companies List was apparently prepared by Ms Lo, and there was no mention therein that the husband himself was holding any shareholding/beneficial interest of those companies in trust for R2 or anyone else. On the 2^nd Companies List, 17 were Hong Kong companies, and 2 were PRC companies.

189.Anyway, the husband’s position throughout these proceedings was that he held/holds all shareholding/interest in the companies for R2.

190.About 10 months after the wife issued her 1^st Proceedings, on Disposition Day, the husband transferred all shares registered in his name in 11 of the Hong Kong companies in the 2^nd Companies List to offshore companies.  According to the husband, the transfers were in accordance with R2’s instructions, “due to the wife’s clear intention to take the benefit of the husband and R2’s trusteeship to assert a claim against R2’s assets.”[90]

191.The wife’s case was, however, the husband held/holds beneficial interest in all the companies, or otherwise he had/has sole control of them.  Furthermore, the wife alleged that the husband was/is also the beneficial owner of the offshore companies including AC Oversea (BVI), WS (BVI), SBI (Bahamas), and MVI (Panama).

192.Most of the companies were set up by the purchase of shelf companies and for analysis purpose, for such companies, the date of acquisition will be the date of purchase of the shelf company.  I will group the various relevant companies into the following:

(i) WS (HK)

(ii) The AC Group

(iii) The Foundations

(iv) The Beijing Group

(v) The MV Group

(vi) The 3Offshore Companies: AC Oversea (BVI), WS (BVI) and SBI (Bahamas)

WS (HK)

193.WS (HK) was acquired 9 years prior to the spouses’ marriage, on about 1 October 1980 with a nominal share capital of HK$10,000.  R2 and her elder son WM were appointed the only 2 directors after acquisition and 1 share of HK$10 was issued respectively to each of them.  They were the only shareholders at the time of acquisition.

194.At that time, the husband was only 21 years old and was then still in San Francisco.  There was no sufficient evidence to show that he was involved in the acquisition of WS (HK) and I accept that it was R2 and WM who set up this company.  At that time, the family home of R2 and her children was at the Kennedy Road Flat, which was purchased in July 1965 by R2 in her personal name.

195.In November 1983, Flat D of the Estoril Court Flats was purchased in the name of WS (HK).  The purchase price was about HK$4.3m but there was a mortgage loan of about HK$3m[91]. The wife at one stage appeared to be saying that the husband had paid for the purchase price, but I find that there was no sufficient evidence that this was the case, since it seems in 1983 the husband was mainly in San Francisco working for R2’s company Pyrenee over there.  R2 had by that time been working for the Macau Corporation for several years and I accept that the down payment for the purchase price of Flat D and the subsequent mortgage repayments came from R2.

196.Then on 23 January 1984, in addition to R2 and WM, the husband was also appointed as a director by R2, and his sister AM was appointed as an alternate director to the husband.  This was the first time the husband’s name appeared on the company records.  From the company records, it can be seen that WM was also appointed as the company secretary on 7 May 1986.  Thus, WM appeared to be the one who was assisting R2 in the company secretarial matters at that time.

197.At end of April 1987, Flat C of the Estoril Court Flats was purchased through WS (HK) for about HK$5.5m, with a mortgage loan of about HK$4.48 m which seemed to have been increased for an additional charge for HK$250,000 in 1989.  At the time of the purchase in 1987, the husband had started conducting Trading Activities on behalf of Pyrenee[92]. Again, I find that there was no sufficient evidence that the purchase price had come from the husband, and I accept that the down payment and subsequent mortgage repayments of Flat C came from R2.

198.The purchase of the two Estoril Court Flats took place before the spouses’ marriage which was about 2 years after the purchase of Flat C.  There was no change in the shareholding until June 1992.

199.Hence, at the time of the spouses’ marriage in March 1989, the only shareholders of WS (HK), the registered owner of the Estoril Court Flats, were R2 and WM.  There was no sufficient evidence that the husband had acquired any interest in WS (HK) or in the Estoril Court Flats at the time of the marriage.

200.It was only on 16 June 1992 that 2 further shares in WS (HK) were allotted, one to the husband, and the other to the wife.  On the same day, the wife was also appointed as a director.  1992 seemed an eventful year for this company in that in November that year, the Kennedy Road Flat was transferred by R2 from her personal name to WS (HK) at a consideration of HK$7m, and on the same day all 3 properties, namely the Estoril Court Flats and the Kennedy Road Flat were charged to the Wing Lung Bank for a total of about HK$18m. Prior to the transfer and the new charge, according to the annual return filed in the same month the company had indebtedness of only HK$5.19m. But by January 1993, the indebtedness of the company had increased to about HK$23.8m.

201.WM resigned as secretary of the company on 29 December 1993 and the wife was appointed the company secretary in his place.  It was only 1992/1993 that the spouses became more involved in WS (HK).

202.Then on 5 March 1995, another share was allotted to the husband, which was stated to be partly payable in cash and the amount of premium payable was HK$2m.  The consideration for the allotment was the allottee’s waiver of the sum of HK$2m, being part of the debt then due and owing by the company to the allottee[93]. It is not clear as to why the company would owe the husband HK$2m at that time, but as a result of this allotment, out of the 5 shares, R2, WM, the wife each held one share, and the husband held 2 shares.  The spouses together held the majority of the shares.

203.Finally, on 27 June 1997, 994 shares were allotted to an offshore company WS (BVI), and 1 share allotted to another offshore company SBI (Bahamas). I will go into the ownership of these offshore companies later.

204.It is not clear what happened but, according to the annual return filed on 22 January 1998, the company’s indebtedness suddenly increased to an amount of HK$737,547,550[94].

205.By June 2001, there seemed to be some media reports in relation to the financial situation of the husband and R2[95] which was denied by the Spouses at the time.  Anyway, the relationship between the husband and his siblings had deteriorated, and so had the relationship between R2 and WM.  AM ceased to be an alternate director to the husband of WS (HK) in July 2001.  On 2 February 2002, the one share held by WM was transferred to R2, but on the same day, R2 transferred that share to the husband.  This was about 2 days before WM and AM applied for an injunction against R2 and the husband in Macau before commencing the WM Litigation against, among others, their mother R2 and the husband[96].  In the claim in the WM Litigation, it was set out that the properties owned by WS (HK) were encumbered with big mortgages, and that the media had been saying that WS (HK) had massive debts to a company solely owned by the husband. It is not clear what company of the husband’s they were referring to.  

206.As a result of WM’s and R2’s transfer, R2 remained holding 2 shares, whereas the husband’s shares were increased to 3 shares, with the wife still holding 1 share, WS (BVI) 994 shares, and SBI (Bahamas) 1 share. The annual return dated 22 January 2003 was signed by R2 herself.

207.The wife had said that the husband was the beneficial owner of both WS (HK) and WS (BVI)[97], and that her 1 share was a gift to her.  The husband on the other hand denied that he was the beneficial owner of WS (HK) or WS (BVI), and his case was that he and the wife were only holding some nominal amount of shares, and he had said that they were “bare trustees” of the beneficial interest of those shares which belonged to R2’s company[98]. His case was thus he and the wife were holding their shares in trust for R2’s company (emphasis added), but it is not clear which company the husband was referring to.

208.The 1992 allotment of 1 share to the husband and 1 share to the wife was by no means a nominal amount of  shares, since after the allotment, there were 4 equal shareholders, R2, WM, the husband and the wife, each holding 1 share, or 25 % interest. There was no evidence of any declarations of trust having been signed by the husband or the wife for any of the R2’s companies.  The husband is a highly educated and astute person and he knew full well about declarations of trust, as in the case of the company of ACE, the wife and Madam Lai were asked to sign declarations of their shares and this was just a year before in 1991. There was no satisfactory explanation from the husband as to why the wife was not asked to similarly sign a declaration of trust for her 1 share in WS (HK). R2 had been described by the husband as a “very successful entrepreneur” and at that time she was an executive director of the Macau Corporation, and no doubt an experienced businesswoman.  There was also no satisfactory explanation from R2 as to why she did not require the wife, or the husband to sign any declaration of trust. 

209.Before the 1992 allotment, R2 held 50% of the shareholding of the company.  If R2 indeed had wanted to increase her shareholding to 75%, she could have simply allotted another 2 shares to herself.  Again, there was no satisfactory explanation from either the husband or R2 as to why R2 needed to increase her shareholding by allotting 2 shares to the husband and the wife to hold in trust for her.

210.According to the 1^st Companies List, the husband’s remarks thereon were that he held the 3 shares in WS (HK) in trust for WS (BVI). However, at the time of the 1992 and 1995 allotment, WS (BVI) was not yet in existence.  In any event, when the husband transferred out those shares held by him on the Disposition Day, the transferee was not WS (BVI), but AC Oversea (BVI). Finally in the Joint List of Issues, it is stated that the husband’s case was that “nominal amount of shares in WS (HK) were shares held as bare trustees and the beneficial interest of these shares belongs to R2’s companies”.  Again, this was a vague statement, since it was not clear which of R2’s companies the husband was referring to.

211.Since the husband had claimed that he and the wife were “bare trustees”, presumably his case was that there was no consideration paid by them for their shares. On 16 June 1992, when 1 share was allotted respectively to them, the nominal amount of HK$10 was due and payable in cash on allotment and no other consideration was listed.  The return of allotments was prepared and presented by the then solicitors acting for the company, and signed by the husband as director[99]. No accounts or evidence had been produced by the husband or R2 to show that the actual value of the allotted shares to the husband/the wife in 1992.

212.Anyway, I find that there was no sufficient evidence the wife was holding her 1 share as a trustee for R2’s company/companies.  I accept the wife’s evidence that the 1 share allotted to her in 1992 was given to her. Similarly, I find that the 1 share allotted to the husband in 1992 was given to him.

213.As for the 1995 allotment of 1 share to the husband, as mentioned earlier, there was in fact a consideration for this allotment.  The return of allotments was prepared by another firm of solicitors acting for the company at the time and signed by WM as director[100]. I find there was no sufficient evidence of the husband being a trustee only in respect of this 1 share.

214.So far as the 2002 transfer of 1 share from WM to R2 and from R2 to the husband, there was no satisfactory explanation from the husband or R2 as to why R2 would need to transfer this 1 share for the husband to hold it in trust for her, when she could have simply held it herself.  I find there was a presumption of advancement/gift of this 1 share from R2 to the husband, and there was no sufficient evidence produced by the husband and/or R2 to rebut this presumption.  In my view, the share was simply given to the husband by R2.

215.R2 herself signed the annual return dated 22 January 2003 confirming the then shareholding in the company, including those of the husband and the wife.  It is my finding that as at that date, the husband held the beneficial interest in his 3 shares, and the wife held the beneficial interest in her 1 share.

216.On 21 January 2004, the wife resigned as secretary and the husband was appointed the secretary.

217.By 2005, the total outstanding indebtedness of the company was stated to be HK$800,236,357[101]. The amount of the indebtedness remained around HK$800m until the annual return dated 22 January 2009 showed a reduction from around HK$800m to about HK$32.5m[102]. It was not clear as to how this was brought about.

218.Finally on Disposition Day, the husband transferred his 3 shares to a BVI company AC Oversea (BVI).  During the trial, the husband’s case seemed then to be that he had previously signed blank share transfer forms pursuant to instructions from R2 which she then decided to effect on Disposition Day.  Ms Lo had also said during the trial that the husband had signed undated transfer forms “many years ago” and that R2 decided to date them on the Disposition Day as the husband was involved in the divorce and therefore the husband was asked to effect the transfer.  Ms Lo did not give details as to when these undated blank share transfer forms were allegedly signed nor did she give details as to which company she was referring to.

219.The husband did not produce copies of any alleged undated pre-signed share transfer forms in his affirmations/Form Es.  His 1^st Form E was filed about 5 months before the Disposition Day and he did not disclose the existence of any such forms.  On the 1^st Companies List, according to him, his 3 shares were held in trust for WS (BVI), and yet the transferee on these so called undated pre-signed share transfer forms was AC Oversea (BVI).  I reject his evidence and Ms Lo’s evidence in relation to there being undated pre-signed transfer forms.

220.Even though AC Oversea (BVI) was served with the wife’s Setting Aside Application only at a late stage, there was still ample opportunity for AC Oversea (BVI) to apply to intervene, as the trial did not  finish until about 12 December 2012.  

221.The disposition by the husband was effected within 3 years before the date of the wife’s Setting Aside Application.  I am satisfied that the disposition by the husband had had the consequence of defeating the wife’s claim for financial relief and I find that he had not discharged the burden on him to rebut the s 29 AJ Presumption.  I accordingly set aside the disposition.

222.There had been no independent valuation of this company[103]. It appears from a notice from Inland Revenue Department dated 2 December 2009 that there was at that time no requirement to file any profits tax returns[104]. Ms Lo had produced a letter from the auditors dated 27 August 2012[105], which stated that for 3 years, no management accounts and accounting records had been delivered to the auditors to perform audit but the directors of WS (HK) informed them that the said documents would be passed to them soon.  So far, none had been produced to the court.

223.The only information available before this court was the agreed net valuations of the landed properties, namely Estoril Court Flats and the Kennedy Road Flat (HK$221,523,111.50), 3 carparks (HK$1.8m), the Macau Property (HK$25.5m).  The total of the agreed net valuations of the landed properties comes to about HK$HK$248,823,111.50.  I accept what Mr Li SC had submitted that the value of the asset of a company is not the same as the value of the company. However, neither the husband nor R2 had put forward any valuation for the company for this court’s consideration.  There was no evidence that this company had ever conducted any trading or business, and the indebtedness of HK$800m seemed to indicate a great deal more assets in the past years.  The indebtedness was reduced to only about HK$32.5m in January 2009, which seemed to be the then outstanding mortgage.  On the information before this court, and doing the best I can, I find the net asset value of this company should be at least HK$248.8m.

AC Group

224.After the marriage, a number of companies set up with the first two names bearing the initials “A” and “C”, out of which apart from one overseas company AC Oversea (BVI), the rest are all Hong Kong companies[106]. According to the wife, the names AC and in particular the Chinese names were chosen by her, as she was the one involved in the art and entertainment field. This was denied by the husband.  I accept the wife’s evidence in this regard.

225.The husband had said after marriage the wife was always restless at home and that she liked being in the spotlight, and that R2 realized this[107]. His evidence was R2 therefore suggested that the wife be given some opportunities in running some general trading business, and he then got approval from R2 to set up ACE[108]. However, ACE was in fact not the 1^st company in the AC Group to be set up.

226.According to what the husband had said during the trial, the purpose of setting up all these various companies with the name AC was to prevent other companies using the same name.  When asked whose idea it was, the husband claimed it was R2 who had the final say, and that they discussed with R2 at the time of setting up these companies.  In the early 1990s, R2 was still working and mainly living in Macau, and the husband said that those discussions he had with R2 would take place on those occasions when they were having a meal during R2’s visits to Hong Kong.  These were clearly casual conversations.  I do not find that there was any sufficient evidence that R2 was actually involved with the acquisition of any of the companies in the AC Group.

227.The matters which appeared to be common with most of the companies in the AC Group were that the company was acquired by the husband through solicitors and then in June 1997 further shares were allotted to AC Oversea (BVI) , and then on Disposition Day, all shares in the husband’s name were transferred out to AC Oversea (BVI) and thereafter, Ms Lo came into the picture in about 2010/2011, and the husband’s name gradually was removed from all the companies.  I will first of all list the 10 Hong Kong companies which I have included in the AC Group I have included also one company under AC Group, which does not bear the initials “A” and “C”.  This list also accords with Mr Li’s list in his Closing Submissions[109]. The companies are:

Abbreviated name	Date of Acquisition
(i) AC Ltd	21.09.1990
(ii) ACE	12.07.1991
(iii) AC International	09.08.1991
(iv) AC International Property	24.10.1992
(v) AC International Video	24.10.1992
(vi) AC International Holdings	24.10.1992
(vii) F&B International	24.10.1992
(viii) AC International Film	24.10.1992
(ix) AC International Culture Studies Foundation	28.08.2003
(x) AC Overseas Nominee	03.07.2009

228.Mr Li, Counsel for R2 and R3, submitted that this court was not required to determine the ownership of the above companies in the AC Group, save for ACE, as apart from ACE, there was no evidence from the wife that the other companies had or have any assets in the past or the present[110].

229.What Mr Li submitted about ACE being the only company in the AC Group which had/has assets in the past or the present was not in fact correct as can be seen later.  Further, the wife had made a Setting Aside Application in respect of all the husband’s shares transferred out by him on Disposition Day, and thus I will still need to deal with this aspect of her application, although I am of the view that I do not need to go into the detail of the setting up of each and every one of the companies in the AC Group.

230.One could see from the above list that the first three, namely AC Ltd, ACE, and AC International were acquired within one year of the marriage, then 5 more were acquired on the same date about a year later.  The last one AC Oversea Nominee was acquired only in July 2009, when the spouses’ relationship had deteriorated.

231.There were a couple of other AC companies mentioned during the proceedings, such as AC International Travel Amusement, which was a shareholder of another company called AC Casino Resort, which was formed to apply for a gambling licence in Macau, and which I will go into later in this judgment.  There was also a company called IS Ltd which had been referred to as part of AC Group, as the first two characters in its Chinese name was similar to the AC Group of companies.

AC Ltd

232.AC Ltd was the first shelf company to be acquired, and upon acquisition the husband and the wife were appointed as directors of this company, and the husband appointed as secretary.  The name was changed to AC Ltd only about a year later.

233.After acquisition, the husband held 2 shares and the wife 1 share of nominal value of HK$1 each out of 10,000 shares.  HK$3 was paid up in cash.  The 1^st annual return after acquisition was signed by the wife as director and the husband as secretary and was presented to the Companies Registry for filing by the husband’s then solicitors Szeto & Yeung.

234.The shareholding remained the same until 27 June 1997 when 9,997 shares of HK$1 were allotted to an offshore company AC Oversea (BVI). The amount was paid up. The return of allotments was signed by the husband and by the company’s then solicitors CK Mok & Co.

235.Thereafter there was no change to the directors/secretary/shareholders until 21 November 2009, after the wife had issued the 1^st Proceedings.  The wife resigned as a director, and on the same date, AC Oversea (BVI) was appointed as a director, and the consent to act was signed by R2 as director of AC Oversea (BVI), and the notification to the Companies Registry was signed by the husband.

236.On 16 April 2010, AC Oversea Nominee was appointed as a director and the consent to act was signed by R2.  Further, on the same date, R2 was also appointed as a director in her own name.

237.Then on Disposition Day, the husband transferred his 2 shares to AC Oversea (BVI). 

238.On 20 July 2011, Ms Lo was also appointed as a director of the company.  On 21 July 2011, the husband resigned as the secretary and AC Nominee was appointed in his place.  The notification to the Companies Registry was signed by Ms Lo, as director of AC Nominee. The removal of the husband’s name from this company was thus complete.

239.The result of all this means there are now only 2 shareholders, with the wife still holding her initial 1 share, and 9,999 shares held by AC Oversea.  There are now 3 directors, R2, AC Oversea, and Ms Lo.  AC Nominee is the secretary.

240.In the husband’s 2^nd affirmation, he had referred to trust instruments being executed by the wife and Madam Lai in relation to ACE “in favour of me for my mother and they each hold 1 share ...on behalf for my mother…” [111].  He did not at that time said anything about trust instruments being signed in relation to any other companies.  During the trial the husband, however, suddenly said each company had its own trust documents, in particular the first 3 companies acquired in the AC Group, namely AC Ltd, ACE and AC International.

241.Anyway, even according to the husband’s own evidence, those trust documents were in favour of him instead of R2, as he claimed that R2 did not want her name to appear together with the wife’s.  I find what the husband said was rather odd, since R2 and the wife were both shareholders of WS (HK), and R2 did not seem to mind her name appearing together with the wife’s in that company.

242.The husband had further said that so far as he could recall, the trust documents in relation to ACE and the other companies were placed in the White Cabinet, and the documents were later removed by the wife.

243.The husband admitted that he did not sign any trust documents in favour of R2, and the reason he gave for this was that his mother trusted him, and there was no need for him to sign any trust document in favour of R2.

244.Apart from ACE, which the wife did not dispute, I find that there was no sufficient evidence to support what the husband had alleged, that there were trust documents signed by the wife in relation to the other companies in the AC Group.

245.Thus, as far as AC Ltd is concerned, I find that there was no sufficient evidence that the spouses held their shares in trust for R2.  I find that the wife held her 1 share in her own right and was/is the beneficial owner thereof.  I also find the husband had held his 2 shares in his own right and that he was the beneficial owner of those 2 shares immediately before his transfer out on Disposition Day.

246.It is not clear as to what business AC Ltd had conducted since its acquisition.  According to the wife, AC Ltd was once used to hold ‘vehicle registration plate number’ and ‘exotic cars’ in the early 90s[112]. The wife had produced a certificate of particulars of a 1981 Rolls Royce held by AC Ltd as at 20 April 2010[113]. Due to the lack of information produced by the husband, the assets and valuation of this company were unknown.  

247.Assuming there were assets as at the Disposition Day, I am satisfied that the disposition by the husband had had the consequence of defeating the wife’s claim for financial relief and I find that he has not discharged the burden on him to rebut the s 29 AJ Presumption.  I accordingly set aside the disposition.

ACE

248.About 9 months after the acquisition of AC Ltd, another shelf company was acquired in July 1991.  Upon acquisition, 2 subscribers’ shares of HK $1 each were transferred to the wife and her mother Madam Lai respectively and they were paid up in cash.  The nominal share capital was HK$10,000.  The wife and Madam Lai were appointed the only directors and the wife was appointed as secretary. Three months later, on 18 October 1991, the name of the shelf company was changed to ACE.  I find no sufficient evidence that R2 was involved in the actual acquisition of this company at that time.

249.The 1^st annual return was signed by the wife and presented for filing by solicitors Szeto & Yeung.

250.According to the husband, ACE was set up for “general trading business” by R2, but apart from purchasing the Grand Panorama Flat, the Hunghom Offices, and a Convention Plaza flat which was subsequently sold, I find there was no evidence of any other general trading business being conducted at that time.

251.After ACE was set up, the spouses’ general household expenses, the salary of the domestic helper, the family’s expenses at various clubs, holidays/family trips, and the credit card expenses of both the wife’s and Madam Lai’s were paid through ACE.

252.The husband’s case was that R2 had asked him to issue 2 shares in ACE, 1 in her name, and 1 in his name in trust for her, but as he was involved in litigation at that time, R2 then suggested the 2 shares be held for her by the wife and Madam Lai.  What he said did not seem to make sense since 1 share could at least be issued to R2 herself, and if R2 was indeed concerned about the husband being involved in litigation, why would she then want to allot one share in WS (HK) to him about a year later, whether to hold on trust or not.

253.As mentioned earlier, according to the husband, declarations of trust were signed in respect of this company by the wife and Madam Lai in favour of him, although R2 was in fact the beneficial owner of those 2 shares.  Again, according to the husband, the trust documents were kept in the White Cabinet, and they were later removed by the wife.

254.The wife’s case in relation to her shareholding in ACE was somewhat confusing.  On one hand she did not deny that she and Madam Lai did execute declarations of trust, but she said they were in favour of the husband, and not for R2. On the other hand, she claimed that her share was owned by her absolutely, and that Madam Lai was also entitled to the share held by her as Madam Lai had paid for the down payment of the Grand Panorama Flat.

255.Anyway, on 27 June 1997, 9,998 shares were allotted to AC Oversea (BVI).  There had been no change in the shareholding since.

256.As for directorships, the husband and R2 only became appointed as directors on 28 November 2008. Then on 19 January 2009, AC Oversea (BVI) and WS (BVI) were also appointed as directors, and the consent to act was signed by the husband, as director respectively for the two companies.  On 26 January 2009, the husband was appointed as secretary of the company and on the same date, the wife resigned. The husband was then taking over the management of this company.

257.The day after the wife issued the 1^st Proceedings, on 21 November 2009, both the wife and her mother Madam Lai resigned as a director and SBI (Bahamas) and AC Nominee were appointed in their stead.  The consent to act for SB Ltd was signed by R2, as director of SBI (Bahamas), and the consent to act for AC Nominee was signed by the husband as director.  The indebtedness of the company on 27 November 2009, was about HK$2.955 m[114].

258.In February 2010, the husband resigned as director.  Then in August 2010, Ms Lo came into the pictures and was appointed as a director. On 21 July 2011, the husband further resigned as secretary and AC Nominee was appointed in his stead.  The removal of the husband’s name from this company was then complete.

259.As a result, at present, the wife, her mother Madam Lai each still holds 1 share, but 9,998 shares in the company are held by AC Oversea (BVI).  The secretary is AC Nominee.  The directors are R2, AC Oversea (BVI), WS (BVI),  SBI (Bahamas), AC Nominee, and Ms Lo.

260.Mr Li submitted that there was unequivocal evidence from Ms Lo and the driver Mr Au that ACE was beneficially owned by R2.  I do not find that there was sufficient evidence that Mr Au would have the knowledge of the actual shareholding structure of ACE, or the ultimate beneficial ownership thereof.

261.As for Ms Lo, what she said in her affirmation was that the payments for the purchase of the Grand Panorama Flat and the Hunghom Offices, decoration expenses, and thereafter all the mortgage repayments and expenses such as management fees and utilities of these properties came from R2[115]. However, she said she was unable to locate any payment records or relevant documents due to the lapse of time.  It seems Ms Lo’s position, same as Mr Au’s, was that as R2 was the one who made those payments, she was therefore the beneficial owner.  This also was the husband’s position.  In my view, R2 made the payments either as gifts or loans and in case of a loan, it was not clear whether it was a loan to the husband or to the company.  If to the company R2 would be at most a creditor of the company.

262.It is not clear how those payments were recorded in those audited financial statements of ACE prior to 2007, namely whether as loans from the husband, from R2 or others.  Ms Lo had produced copies of a couple of cheques in 2006 from a HKD account  in the name of the husband with Standard Chartered Bank, which the husband alleged he held in trust for R2, on which she had typed a remark “Loan to ACE”[116]. These cheques were signed by the husband.  When asked when she started to type remarks on these cheques, she said she could not remember.

263.Ms Lo had said during examination–in-chief that all amounts from R2 to the companies, save for MVF, were recorded in the books as “loans” to the husband.  Ms Lo had initially said R2 had not made up her mind as to whether the payments to the companies should be regarded as “gifts” or “loans”, save that the amounts to MVF had been decided by R2 to be “gifts”.  She then said others were “loans” to the companies.  Under cross examination, Ms Lo said when she started working for ACE in 1994 she had recorded monies from R2 to ACE as “payments from R2” or “payments lent by R2”.  When this court asked this was until when, she needed a break, and then thereafter, Ms Lo wished to retract what she had said and she said she could not recall how it was booked in 1994.  She then jumped to 2006 and said from then onwards, payments to ACE were recorded as “loans from AC Oversea (BVI)”.  She then remained silent again when asked as to how the payments to ACE were booked between 2006 to 2008, and then after awhile she said she could not remember.  She was obviously under a great deal of stress trying to answer what were to her difficult questions, and she had broken down a couple of times when she was unable to answer the questions. 

264.In fact, there were audited financial statements of ACE up to 2007, but Ms Lo then said as many errors were discovered they were trying to make adjustments/amendments.   

265.Neither the husband nor R2, nor Ms Lo, had produced those audited financial statements prepared prior to 2007, or any exchanges with the auditors and/or Inland Revenue as to what adjustments/amendments were needed to be made. 

266.Ms Lo had said during the trial that in the 1990s, the wife and Madam Lai were responsible for the daily operations of ACE, except that R2 would have the say in relation to the use of the money by ACE.  She, however, admitted that R2 rarely gave her instructions and that she just operated along existing practice for recurring expenses unless ‘special’ items of expenditure arose.  Ms Lo said her knowledge that R2 was the beneficial owner of the AC Group and the other companies was because she was told by her predecessor and also she said the source of funds was from R2.

267.Mr Li submitted that R2’s position “as an owner of the AC Group can be abundantly seen from the documents”[117] (emphasis added).  It seems even R2 was not saying she was the only owner of the AC Group.

268.Among the documents which R2 relied on to assert her ownership and referred to by Mr Li were:

(i)   bank statements of a bank account at the Standard  Chartered Bank held by the husband allegedly for R2  and a bank account allegedly held in trust by Ms Lo for R2

(ii)   A Minute of MVI (Panama) dated 20 August 2008

(iii)   Two Minutes of ACE of 28 November 2008 and 26 January 2009

269.So far as the bank statements in (i) are concerned, they only showed that the monthly repayments of the mortgage loan secured by the Grand Panorama Flat and the Hunghom Offices for 2011-2012 came from alleged trust accounts.

270.As for (ii), which was described as the “strongest evidence” of R2 as an owner of the AC Group of companies was her financing of a HK$20m loan to the company IS Ltd.

271.I note, however, that IS Ltd was only acquired on 28 July 2008, almost 17 years after ACE was acquired and its landed properties were purchased. Although IS Ltd was described as one of the AC Group of companies in the above minute, it was not part of the AC Group, identified above in this judgment, or in Mr Li’s own list in his Closing Submissions[118]. Anyway, whether IS Ltd was one of the AC Group or not, it can be seen from the minute, the HK$20m was only for the purpose of providing the proof of financial standing for the application for the auction licence by Copia Beijing, and in fact only remained in the bank account of IS Ltd for 8 days after which the amount was re-transferred back to MVI (Panama)[119].

272.On the date stated on the minute of MVI (Panama), i.e. 20 August 2008, the husband was the registered majority shareholder of IS Ltd holding 8,000 out of issued 10,000 shares in IS Ltd and he was the sole director of IS Ltd.  It was only more than 2 years later, on Disposition Day, that he transferred his shares out to AC Oversea (BVI).  In any event, this minute, in my view, does not support the allegation that R2 was/is a beneficial owner of IS Ltd or any of the AC Group of companies.

273.As for (iii) is concerned, the 28.11.08 minute was signed by the wife and Madam Lai as directors of ACE.  This minute was to appoint both the husband and R2 as an additional directors of ACE.  The 26.01.09 minute was signed by the wife, Madam Lai, and R2 representing AC Oversea (BVI), as shareholders and the purpose was to increase the quorum for directors’ meetings to 4.

274.The wife had admitted that prior to her signing the above minutes, she had consulted her legal advisers.  Mr Li submitted that by doing so the wife was acknowledging R2’s right to take part in ACE’s management, and such right must have originated from R2’s ownership of the company, and that the wife had also acknowledged that R2 was a legitimate representative.  I accept that by signing those two minutes, she had allowed the husband and R2 to join in the control and management of ACE as directors.  Even though the wife’s evidence as to why signed those minutes was confusing, I do not, however, agree with Mr Li that by signing these minutes there was any acknowledgment by the wife that R2 was the sole beneficial owner of ACE, or the sole beneficial owner of AC Oversea (BVI).

275.Other evidence relied on by R2 to assert her ownership of the AC Group, or ACE, was that she had attended the Hunghom Offices personally, and meetings of various companies were held there, and  further R2 had used the address of the Hunghom Offices as her address for various companies, and for her personal affairs. However, this could equally be said of the wife and the husband, as they had also used the address of the Hunghom Offices for various purposes, including personal ones.

276.It was submitted by Mr Li that R2 did take over the management of ACE as a director by signing on another set of minutes on 9 March 2009 to set the amount of credit card payments made by ACE to herself, each of the spouses and Madam Lai (“Credit Card Minute”)[120], and various letters to HSBC and resolution of ACE in relation to the safe deposit boxes held by the company[121]. Suffice to say at this stage, all these documents said to be signed by R2 were signed when the relationship between the spouses had turned sour. 

277.Having said all the above, as the wife did not dispute that she and Madam Lai did sign declarations of trust in respect of this company for the husband, I find that the 2 shares held by them were/are indeed so held, and that the husband is the beneficial owner of those 2 shares.  I find, however, that there was no sufficient evidence that there those 2 shares were held in trust for R2, whether by the husband or the wife, or Madam Lai.

278.Apart from the Grand Panorama Flat and the Hunghom Offices, ACE held no less than 16 or 17 safe deposit boxes at the Hong Kong Shanghai Bank.  The wife had alleged that her jewellery was kept by the husband in one or more of these boxes. The husband claimed that he last went to open the boxes was 5 or 6 years ago, and he was not sure what was inside the boxes.  The wife, Madam Lai, and the husband were signatories, and any one could sign and access the boxes, until October 2009 when the husband became the single signatory, and then the husband alleged that when he left the company in about March/April 2010, Ms Lo became the only signatory.  Ms Lo, however, said during the trial that the signatories used to be either the wife or Madam Lai, and then it was changed to the husband being sole signatory, and when his signing authority was deleted and she became the sole signatory, but this was only since some time in 2012.

279.There was no application made by the wife to open the boxes in her presence or to restrain the opening of the boxes by the husband or any one at the commencement of her 1^st Proceedings, or for valuation of the contents of these boxes.  The contents and their current value were simply unknown.

280.There were also two club debentures, one at Aberdeen Marina Club (“AMC”), and one at Macau Golf & Country Club and both debentures allegedly assigned to ACE pursuant to a sale agreement signed between the husband and ACE as the husband claimed he needed the money.  The AMC was allegedly sold to ACE for HK$1.25m and the Macau Golf & Country Club debenture was allegedly sold to ACE for HK$350,000, but ACE would not be able to change the name of the owner of these club memberships, since they were ‘individual’ debentures held in the husband’s personal name, as opposed to transferrable ‘corporate’ debentures.  The whole exercise, in my view, was an attempt by the husband to try and explain his source of funds after the 1^st Proceedings had commenced.  Anyway, according to the husband, those debentures are now assets of ACE.

281.No current financial statements of this company had been produced, whether audited or unaudited, and there was no application for any independent valuation to be prepared of ACE.  All this court now has are agreed valuations for the Grand Panorama Flat and the Hunghom Offices, and the present outstanding mortgage liabilities.  The net value of the Grand Panorama Flat and the Hunghom Offices was agreed to be HK$98,781.083.30[122]. The indebtedness as shown in the annual return appeared to be only the outstanding mortgages of the landed properties only, but this would have been taken into account in the net value.  I am aware that this is only agreed valuation of the landed properties and this is different from the valuation of the company.  However, I find no businesses had ever been carried out by this company, and without any proper valuation of the company being conducted, and doing the best I can, I am of the view that the net asset value of this company, based on the landed properties alone, should be about HK$98.8m. 

AC International

282.At one stage the husband and the wife decided to produce a film and the company acquired by for this purpose was AC International.

283.This company was acquired about a month after ACE when the wife and another person were appointed as directors, and the wife was appointed the secretary.  The 2 subscribers’ shares of HK$1 each were transferred to the wife and the other person respectively on the same day.  2 months later, the other person resigned as director and her 1 share was transferred to the husband who was appointed as a director in her instead. Further, on the same day, another share was allotted to the husband.  Thus, since 9 October 1991, the husband held 2 shares and the wife 1.

284.The spouses remained the only shareholders and directors until 9,997 shares of HK$1 each were allotted to AC Oversea (BVI) on 27 June 1997.

285.There was no change until 30 April 2007 when the wife resigned as secretary and the husband appointed in her stead.

286.Then after the wife issued her 1^st Proceedings, on 21 November 2009, the wife resigned as a director and AC Oversea (BVI) was appointed in her stead with R2 signing as director on its behalf.

287.On 16 April 2010, the husband resigned as director and R2 was appointed in his stead.

288.Similar, to AC Ltd, on Disposition Day, the husband transferred his 2 shares to AC Oversea (BVI). As a result, AC Oversea (BVI) now holds 9,999 shares and the wife still holding her 1 share.

289.Finally, on 20 July 2011 Ms Lo was appointed as secretary and on 21 July 2011, the husband resigned as secretary. The removal of the husband’s name from this company  then became complete.

290.This was one of the 3 companies which the husband claimed during the trial that there were trust documents signed, and again they were allegedly kept in the White Cabinet, and those documents were later removed by the wife.

291.Similar to what I have said earlier in relation to AC Ltd and ACE, I find the beneficial ownership of the wife’s 1 share in AC International belonged/belongs to her.  I further find that the husband was the beneficial owner of the 2 shares held in his name prior to his disposition on Disposition Day.  I am satisfied that the disposition by the husband had had the consequence of defeating the wife’s claim for financial relief and  I find that he has not discharged the burden on him to rebut the s 29 AJ Presumption.  I accordingly set aside the disposition.

292.There seems to be only one film ‘Sea Root’ made by AC International in the early 90s[123], and thereafter the film production came to nothing.  There was no evidence from the wife as a former director as to whether AC International ever made any profit from its business. 

293.There was no valuation of this company although documents showed it held some assets. It was the registered shareholder of 8,000 shares of BH Enterprises Ltd.

294.Further, from documents produced by an auction house Christie’s it can be seen that AC International was one of the 3 names, along with the names of the husband and AC Oversea (BVI) appearing on the Consignment Agreements of a collection of valuable timepieces. I will deal with the valuation of the timepieces later on in this judgment.

295.The wife had also produced a certificate of particulars of a 2005 Toyota held by this company as at 20 April 2010[124].

AC International Culture Studies Foundation

296.This is one of the so called 3 Foundations, the other two being MVF and one in the husband’s name MEBH Foundation. I will deal briefly with AC International Cultural Studies Foundation, as in the Joint List of Issues, in relation to a car museum project, and also the wife’s application for a Macau gambling licence, the husband seemed to be saying that he had no involvement in this company and that everything had to do with the wife.  He had called Ms Yau, the Communication Manager of MVF as a witness as Ms Yau also handled charitable activities for all the foundations.

297.AC International Cultural Studies Foundation was acquired in August 2003[125], and there were other individuals involved.  Unlike MVF, this is not a company limited by guarantee.  There had been no exemption from tax under s 88 under the Inland Revenue Ordinance.  The husband and the wife were the only 2 shareholders when this company was acquired, the husband holding 2 shares and the wife 1 share.  There were, however, 9 directors, including the spouses, the Macau lawyer Dr Alves, solicitor CY Mok, Mr Leung and Mr Lai and a Mr CYS.

298.The husband held the majority shares in this company, and by January 2003, R2 had already returned to Hong Kong and again there was no reason as to why R2 could not hold the shares in her name or in any of her so called companies and would need to rely on the spouses to hold shares on her behalf.  Anyway, I find there was no sufficient evidence that either the wife or the husband was holding their respective shares in trust for R2.  I thus reject what he said that he had nothing to do with this company.

299.Similar to the above companies in the AC Group, on Disposition Day, the husband transferred his shares to AC Oversea (BVI).

300.I find that the husband was the beneficial owner of his 2 shares.  Again, like the other companies, there was no information provided by the husband as to what assets this company held/holds, and there was no valuation of this company.

301.It was not thus clear whether there were assets on Disposition Day, and in case there were, I am satisfied that the disposition by the husband had had the consequence of defeating the wife’s claim for financial relief and I find that he had not discharged the burden on him to rebut the s 29 AJ Presumption.  I accordingly set aside his disposition.

AC Oversea Nominee

302.This was the last company in the AC Group which was acquired on in July 2009 when the spouses’ relationship had deteriorated.  There were 2 shareholders, the husband himself holding 1 share, and AC Oversea (BVI) holding 1 share.  The husband appeared to be the only director, with Ms Lo appointed as secretary. 

303.At this time, the husband was having disagreements with the wife over the Beijing companies.  Then several months after the wife issued her 1^st Proceedings, on 4 March 2010, about one month before the husband was due to file his 1^st Form E, he resigned as a director of this company, and R2 and AC Oversea (BVI) were both appointed as directors.  R2 signed on behalf of AC Oversea (BVI).

304.Another 4 days later, on 8 March 2010, the husband transferred his only one share to AC Oversea (BVI).  This disposition was in fact about 6 months earlier than the rest. 

305.There was no reasonable explanation as to why R2, or one of her other alleged companies, was not able to become a shareholder or a director upon acquisition of this company.  Again no declaration of trust or any form of trust document was signed by the husband in favour of R2 at the time of acquisition.  I find there was no sufficient evidence to say that the husband was not the beneficial owner of his 1 share.

306.No financial statements were provided and the value of this company was unknown, although evidence showed it held bank account/s and funds were transferred through such account/s, after the husband closed his alleged trust accounts at Standard Chartered Bank in August 2009.  The husband was a signatory of the account/s of this company.  The balances in such account/s were unknown. The husband had, however, claimed that he owed this company a sum of HK$2,170,965.  I find that the net assets of this company would be at least this amount.

307.The husband’s disposition fell within 3 years prior to the wife’s Setting Aside Application.   I am satisfied that the disposition by the husband had had the consequence of defeating the wife’s claim for financial relief and  I find that he has not discharged the burden on him to rebut the s 29 AJ Presumption.  I accordingly set aside the following dispositions by the husband on the Disposition Day.

Other Companies in the AC Group 

308.As for the remaining 5 companies in the AC Group which were acquired on the same day and were all acquired in a manner similar to the others, I make the same findings based on what I have said earlier, that the spouses held/hold the beneficial ownership of those shares in their respective names.

309.The husband disposed of his shares on Disposition Day to AC Oversea (BVI).

310.There was again no valuation of these companies, and their value was unknown.

311.In the event that there were assets, I am satisfied that the disposition by the husband had had the consequence of defeating the wife’s claim for financial relief and I find that he had not discharged the burden on him to rebut the s 29 AJ Presumption.  I accordingly set aside the following dispositions by the husband on the Disposition Day:

2 shares in AC International Property

2 shares in AC International Video

2 shares in AC International Holdings

2 shares in AC International Film

1 share in F & B International

312.To conclude, I find that the husband was responsible for the acquisition and setting up of all the companies in the AC Group during the marriage, together with the wife, save for the last one AC Oversea Nominee.  It appears that for every new purpose/project, he would acquire a new company.  He might have told R2 generally what he was doing, but as I have said, this would be over a casual chat when they met for tea or dinner. There was no sufficient evidence that R2 had full knowledge of all the details of the AC Group.  The AC Group of companies were acquired for the husband’s own purposes.  Apart from ACE, AC International and AC Oversea Nominee the assets of the other companies were not known.

THE FOUNDATIONS

313.There were 3 Foundations formed during the spouses marriage, namely:

(i) AC International Culture Studies Foundation

(ii) MVF, which I will deal with in connection with the MV Group

(iii) MEBH Foundation

314.The husband said MEBH Foundation was formed by R2 on 20 March 2003, and that it was a non-profit company limited by guarantee.  MEBH are in fact the initials of the husband’s names. Like the other two foundations, there was no exemption from tax under s 88 of the Inland Revenue Department.  According to the husband, the wife was one of the founding members and a member of the executive committee until the start of the 1^st Proceedings.

315.The husband had claimed that the wife was fully aware that the donations through this foundation came from his salary and/or bonus given by AC Oversea (BVI)[126]. Since the husband was only given a title of “Marketing Consultant” at AC Oversea (BVI) in July 2009, it was not clear what salary and/or bonus he was referring to for donations made before July 2009.

316.According to the husband, a donation of US$250,000 was made by the MEBH Foundation to the Georgetown University to honour his father R5[127]. The husband had said that this sum was paid on 2 occasions by AC Oversea (BVI), the first US$125,000 was paid in late 2008 to Georgetown University, and the second US$125,000 was paid in late 2009.  I note that in late 2008, the husband had not yet been employed by AC Oversea (BVI) as a marketing consultant.

317.The husband had said the amount was borrowed from AC Oversea (BVI) by him and needed to be repaid and should be offset against his pension payable to him by AC Oversea (BVI), and the pension was to be US$260,000[128]. During the trial, he then suddenly said this pension was no longer payable as his employment had been less than 10 years, and thus the US$250,000 became a liability from him to AC Oversea (BVI).

318.As the donation was made in the name of MEBH Foundation, in my view the alleged loan of US$125,000 from AC Oversea (BVI) should be repayable by MEBH Foundation and not the husband.

319.Having said this, I accept what Mrs Remedios had submitted that there was no sufficient evidence that this foundation had any substantial assets, as alleged by the wife.

THE BEIJING GROUP

320.I include the following companies in this group:

Abbreviated Names	Date of Acquisition/Formation
(i) BH Enterprises Ltd	09/01/2004
(ii) AC Beijing	15/09/2004[129]
(iii) IS Ltd	28/07/2008
(iv) Copia Beijing	in 2008
(v) MB Ltd	27/01/2010

321.Both AC Beijing and Copia Beijing are companies incorporated under laws of Mainland China.  The rest are Hong Kong companies.

322.According to the wife, BH Enterprises Ltd and AC Beijing were initially set up in 2004 for the purpose to invest in a project called “Beijing Car and  Cultural City”, or a “Car Museum”[130] (“Car Museum Project”).  Further, the purpose of this project was for the husband’s classic/exotic car collection to be displayed and auctioned in Beijing, and the project included a 5 star hotel, a museum, theme park, shopping mall, undersea city, motor vehicle research and education, and involved an investment capital of HK$7,770,000,000, of which HK$3,700,000,000 was for project development and construction.  She then produced a prospectus prepared at the time for this project[131].

323.On the other hand, as set out in the Joint List of Issues, the husband claimed that the Car Museum Project was a ‘story’ of the wife’s and he did not propose such a project. He further said he was not a registered shareholder, nor a beneficial shareholder of BH Enterprises Ltd at the time of its acquisition.

324.I have found that the husband held the beneficial interest in his 2 shares in AC International, the majority shareholder of BH Enterprises Ltd, and he and the wife were 2 out of the 3 directors of BH Enterprises Ltd.  The husband had said that the wife had from time to time sourced projects for investments for R2 to consider, and many of these projects were either fanciful or required great sums to be invested, and R2 had rejected all these proposals, and that the Car Museum Project was one such failed idea.  The husband denied all involvement in this project.

325.In the Joint List of Issues, it was also stated that “the documents relating to the Car Museum Project were in relation to AC International Foundation for Cultural Studies which were in the wife’s name”.  However, as mentioned earlier, the husband and the wife were both directors, out of a total of 7 of this company.  They were the only shareholders, with the husband holding 2 shares and the wife 1.  Even if the initial proposal on the Car Museum Project did come from the wife, I simply do not find it plausible that the husband did not have any involvement as claimed by him.

326.Further, it seems from the list of remittances produced by Ms Lo, the remittances from BH Enterprises Ltd to AC Beijing for the intended auction business only started from 21 September 2006[132]. There seemed to be an earlier remittance of US$300,000 made on 15 November 2004, which was deleted from the list.  It was not clear as to the purpose of that remittance.

327.There were no other reasonable explanation provided by the husband as to why BH Enterprises Ltd was set up as early as January 2004, and having considered the wife’s evidence, I accept what she had said, that BH Enterprises Ltd and AC Beijing were originally used for the Car Museum Project.

328.Like most of the projects undertaken or rather, proposed to be undertaken by the spouses throughout their marriage, there were a lot of discussions/proposals, but ultimately came to nothing.  The Car Museum Project was of these.

329.Anyway, according to the husband, he formed the idea of establishing an auction business (“Auction Project”) in Mainland China with financial support from R2 and sought assistance from a mutual friend Mr CYS[133]. Mr CYS was in fact one of the 7 directors of AC International Cultural Studies Foundation.  BH Enterprises Ltd and AC Beijing were then used for the purpose of this Auction Project.

330.There was no search record produced in relation to the structure of AC Beijing.  Mr Li has submitted that there was simply no clue as to who the registered shareholders were[134]. R2 may have no clue, but from the husband’s own affirmation[135], he seemed to know full well about this company, as he was the legal representative of the company, and according to the husband, he held 10% of the shareholding, and the shareholding of this company was:

(i)	The wife	13 %
(ii)	The husband	10 %
(iii)	Mr CYS	5 %
(iv)	BH Enterprises Ltd	72%

331.AC Beijing is now in liquidation, with alleged liabilities of about RMB910,000.  Apparently, there was a creditors’ meeting, and the wife said AC Beijing owed her about RMB532,000.  BH Enterprises Ltd also claimed to be a creditor being owed about HK$4,465,700.

332.As for BH Enterprises Ltd, at the time of its set up, there were 3 directors, being the spouses and Mr Leung and the shareholding was:

(i)	Dr Alves -	500 shares
(ii)	AC International -	8,000 shares
(iii)	The wife -	1,000 shares
(iv)	Mr Leung -	500 shares

333.According to the husband, money for the expenses of AC Beijing would be remitted through BH Enterprises Ltd and all these were handled by Ms Lo.  This was confirmed by Ms Lo, and according to her, it would be Madam Yu who would call from Beijing to request for funds, and then Ms Lo would ask R2 for approval and once approved, the money would be sent by telegraphic transfer through BH Enterprises Ltd.  She had prepared a list of the remittances from BH Enterprises Ltd to AC Beijing[136]. During the period from 21 September 2006 to 3 July 2009, a total amount of HK$4,465,700 was remitted and this was the amount claimed by BH Enterprises Ltd as a creditor of AC Beijing.

334.After the issue of the 1^st Proceedings, on 28 November 2009, the wife and Mr Leung both resigned as directors of BH Enterprises Ltd and AC Oversea (BVI) stepped into the picture as director on 12 December 2009.Then on 13 July 2010, Dr Alves and Mr Leung both transferred their respective 500 shares to a new company MB Ltd. MB Ltd was acquired in January 2010, with R2 being the sole director and sole shareholder holding 1 share of HK$1, and the husband the secretary.  Then in July 2011, Ms Lo, AC Nominee, AC Oversea (BVI) were appointed directors, and the husband resigned as the secretary, with AC Nominee appointed in his place.  In April 2012, there was another new director a Ms Lam was added.  It is clear so far as BH Enterprises is concerned, the present shareholders are AC International holding  the 8,000 shares, the wife the 1,000 shares and MB Ltd the remaining 1,000 shares. There was no valuation of BH Enterprises Ltd, and its assets are unknown.

335.Going back to the Auction Project, the wife and Mr CYS did identify a partner for this business, namely Huayang Ltd, and IS Ltd was then set up in Hong Kong for the purpose of setting up the joint venture company Copia Beijing.

336.It appears that Copia Beijing was set up pursuant to the joint venture agreement dated 5 November 2008 signed by the husband on behalf of IS Ltd[137].  According to this agreement, the investment capital was RMB10m, and Huayang’s share was 15%, and IS Ltd’s share was 85%.  There were to be 7 directors, 2 to be appointed by Huayang, and 5 to be appointed by IS Ltd.

337.The husband was the sole director of IS Ltd and shares were then allotted on 18 September 2008, resulting in the following:

(i)	The wife –	1,000 shares
(ii)	The husband –	8,000 shares, 1 share of which was initially transferred to MB Ltd on 28/01/2010 leaving the husband still holding 7,999 shares, and later, as seen from an amended annual return filed on 17 September 2012, those 7,999 shares were then amended to have been transferred to AC Oversea (BVI) on Disposition Day
(iii)	Mr CYS –	600 shares
(iv)	Dr Alves –	200 shares, transferred to MB Ltd on 13/07/2010
(v)	Mr Leung –	200 shares, transferred to MB Ltd on 13/07/2010

338.There are now two directors, the husband and Ms Lo.

339.To facilitate the Auction Project, AC Beijing initially rented a one bedroom residential flat in Beijing for the use of the wife whenever she travelled there for business, and later a larger two bedroom flat was leased, for the use of the wife, and according to the husband, for the use of R2 as well[138].

340.Mr Li has submitted that the questions in relation to ownership of the Beijing Group should be struck out from the disputed issues, as there was no evidence that these companies presently own any assets. 

341.So far as I can see, IS Ltd was formed for only the purpose of being the joint venture partner for the Auction Project and for being the shareholder of Copia Beijing. The husband was clearly the person behind the Auction Project, as he himself had said the auction business was his idea, and having signed the joint venture agreement, he then claimed the long delay in processing the registration of Copia Beijing and the operation of AC Beijing made him feel uncomfortable[139]. It was he who decided that he no longer wanted to be appointed the legal representative of Copia Beijing, and then he decided not to sign any document for extending the registration application for Copia Beijing.  In all this he never mentioned anything about consulting R2.  His case was that he held his 8,000 shares for AC Oversea (BVI), and he never said he held those shares in trust for R2.  There was no reasonable explanation given by him as to why AC Oversea (BVI) could not have held those 8,000 shares at the time of setting up of IS Ltd, or why he was required to hold those shares in trust for AC Oversea (BVI). 

342.There was no mention in the 20 August 2008 minutes of MVI (Panama) about R2, or AC Oversea (BVI) being the majority beneficial owner of IS Ltd, and all was stated therein was that IS Ltd applied for financial facilities and/or assistance of HK$20m.  This was granted “in consideration of the relationship between the two companies” and there was no mention of what the relationship was, and in any event the amount was repayable within 30 days “with interest”.  As mentioned earlier, if R2 were in fact the beneficial owner of those 8,000 shares, such assistance could have been provided in a much simpler way.

343.Having considered the above, I am in no doubt that the husband was in fact the beneficial owner of the 8,000 shares in IS Ltd once held by him.

344.Again, like the other projects, the Auction Project came to nothing.  Even though the husband accused the wife for refusing to hand over the official seal and corporate documents and accounts of AC Beijing or the joint venture, and claimed he then felt uncomfortable and decided not to be the legal representative for Copia Beijing and not to sign any document in April 2009, I find the reason why the Auction Project failed to proceed was simply due to the husband’s change of mind.  He said he then discovered the allegedly forged signatures on documents of Copia Beijing in about September/October 2009.  His allegations in relation to those forged documents had been the subject of the Beijing Litigations, and I will leave the Beijing Courts to continue to deal with these issues.  Anyway, all these accusations and disputes led to the wife being restrained from returning to the Estoril Court Flats and the Hunghom Offices, which then led to her issuing her 1^st Proceedings.

345.IS Ltd did have an offshore bank account in Singapore with  Union Bank of Switzerland (“UBS”)[140], into which the HK$20m was transferred by MVI (Panama) in 2008, although as mentioned earlier the amount was then transferred out about 7 days later. Further, the share capital for IS Ltd was increased to HK$10m which, according to the husband, was in February 2010, although no additional shares were in fact allotted. 

346.There had not been any valuation carried out in relation to IS Ltd or BH Enterprises Ltd, or MB Ltd, and thus whether these companies owned/own any assets is unknown.

347.So far as MB Ltd is concerned, this seemed to be created to receive those shares in BH Enterprises Ltd transferred by Dr Alves and Mr Leung.  There was no issue raised by the wife in relation to the beneficial interest of this company.

THE MV GROUP

348.This was the group of companies connected with what was by far the most valuable assets in this case, namely the shares in the Macau Corporation and the shares in ST Shipping held by R2 originally.  Prior to her transfer in 1983, R2’s shareholding was about 7% of the share capital of the Macau Corporation , which seemed to have a net equity of  MOP1,637,790,000, or was estimated to be at least  worth far greater than  MOP300,000,000 in 2001[141]. These shares and/or the beneficial ownership thereof had resulted in a number of litigations, both in Macau and in Hong Kong.

349.For present purposes, I will include under the MV Group the following companies:

Abbreviated Names	Date of Incorporation/Acquisition
MVI (Panama)	15.03.1983
MVI (HK) (formerly known as Cheung Kong)	13.06.2001
MVF	26.03.2003
MS	10.05.2005

350.The first of the MV Group is MVI (Panama), which was incorporated in Panama in 1983 with 10 bearer shares.  It appears that there were only two directors, R2 and the husband and the husband was the secretary and it appears that MVI (Panama) was acquired for the purpose of receiving from R2 the transfer of her 6,251 shares in the Macau Corporation and 45,050 shares in the ST Shipping to MVI (Panama).  According to the wife, the share certificate/s evidencing the 10 bearer shares had always been in the possession/control of the husband.

351.After the 1983 transfer, nothing seemed to have happened for awhile. Then in about 2001, R2 instructed her lawyer in Macau to approach the Macau Corporation for the registration of MVI (Panama) as shareholder[142].  It appears that there were problems in seeking approval from the Macau Government in relation to R2’s 1983 transfer of the 6,251 shares in the Macau Corporation due to there being bearer shares only in MVI (Panama).  The Macau Corporation had also refused to register MVI (Panama) as a shareholder.

352.To tackle these problems, a Hong Kong company MVI (HK) came into the picture. This company was acquired in June 2001 through the solicitors CK Mok & Co, and was initially called Cheung Kong.  Later the name was changed to MVI (HK) in April 2002.

353.On 31 July 2001, there were 3 minutes of meetings of the husband and R2, as shareholders/directors of MVI (Panama) held respectively at 5:00pm (“1^st Minute”), 5:30pm (“2^nd Minute”) and 6:00pm (“3^rd Minute”).  The 1^st Minute was of an EGM of the shareholders of the company, signed by both R2 and the husband[143].  This resolved that no bearer shares were to be issued by the company in future, and the 10 bearer shares be immediately converted to registered shares.  The 2^nd Minute was to resolve that the 10 bearer shares be registered in the sole name of the husband and that new share certificate/s be issued to the husband accordingly[144].  Then the 3^rd Minute approved the transfer of those 10 shares held by the husband to Cheung Kong/MVI (HK), which became its sole shareholder[145].  The signing by the husband on these minutes was witnessed by a notary public in Hong Kong who signed on 27 August 2001 and were then legalized and authenticated by the Consul General of Panama in Manila.

354.The husband and R2 were appointed as the only two directors of the Hong Kong upon the acquisition of MVI (HK) on 13 June 2001, and the husband was also appointed the secretary on the same day.  The two subscriber shares of HK$1 each were transferred respectively to R2 and the husband.  Thus, at the time of the transfer of the bearer shares from MVI (Panama) to the husband to Cheung Kong/MVI (HK), R2 and the husband were the only two shareholders of Chung Kong/MVI (HK), each holding 50%.

355.Subsequently, on 3 January 2002, R2 signed an irrevocable power of attorney in favour of the husband to give him all necessary powers to represent her for an unlimited period in the exercise of corporate rights R2 had in the capacity of shareholder of the Macau Corporation[146] (“Macau Shares P/A”).

356.Thereafter, on 14 January 2002, 9,998 shares of HK$1 each were issued by Cheung Kong/ MVI (HK), 8,999 of which were to R2 and the balance of 999 shares were to the husband[147]. The effect of this was that R2 ended up holding 9,000 shares/90% of this company and the husband 1,000 shares/10%.  The husband said he held his 10% interest in trust for R2, but no declaration of trust was signed at the time of the acquisition of the company, nor at the time of the allotment. 

357.Since there were no longer bearer shares in MVI (Panama), the Macau Government finally issued a notice of no objection to R2’s 1983 transfer of the 6,251 shares some time in October 2001[148].  In reliance thereon, R2’s Macau lawyers then contacted the Macau Corporation to seek the registration of MVI (Panama) as the shareholder of those 6,251 shares.   This then seemed to trigger off the WM Litigation.

358.As mentioned earlier on  4 February 2002, WM and AM had applied for an injunction to retrain any transfer, encumbering or disposal by R2 of her shares in the Macau Corporation and further to restrain the husband from using the Macau Shares P/A, and on 22 March 2002, the WM Litigation commenced in Macau against R2, the husband, MVI (Panama), and Cheung Kong/MVI(HK)  seeking, among other things, an annulment of R2’s 1983 transfer of her shares to MVI (Panama)[149], and to restrain the husband from using the Macau Shares P/A.  WM and AM were seeking an annulment of the 1983 transfer based on an alleged Portuguese and/or Macanese law against R2’s capacity to dispose of more than 1/3 of her assets and/or a gift to R2’s other children with intent to prejudice the inheritance rights of WM and AM.

359.In view of the WM Litigation and/or others, the 1983 transfer by R2 of her shares had up until the trial not yet been registered by the Macau Corporation, and R2 remains the individual shareholder in the company’s register.

360.To deal with the issues raised in the WM Litigation, and/or other reasons, R2 took steps to surrender her Macau residence and to renounce her Portuguese nationality so that she will not be bound by the Portuguese/Macanese law, and further MVF came into the picture.

361.MVF was described to be a ‘charitable foundation’ and was incorporated on 26 March 2003 as a company limited by guarantee.   There was no exemption from tax under s 88 of the Inland Revenue Ordinance.  There were 5 directors, R2, the husband, the wife, Dr Alves and Mr CK Mok, who were also members of the executive committee.  Among these 5, the husband and R2 were the only ‘permanent members’ of the executive committee and the husband was described as the “Founder”. There were 7 subscribers, including all the 5 directors, plus Mr So, and Mr Lai.  Mr Lai was the secretary. 

362.As at 31 December 2004, the deficit of MVF was HK$43,512[150]. Out of this amount, HK$41,012 was an amount due to an executive committee member which was unsecured, interest free and not expected to be repaid within next year.  There was no evidence that MVF had any assets as at the end of 2004.

363.R2’s renouncement of her Portuguese nationality was granted on about 8 April 2005[151]. On 27 June 2005, MVI (Panama) transferred 6,000 out of 6,251 of the shares in the Macau Corporation to MVF by way of a Deed of Gift[152] (“Deed of Gift”), to the intent that the same be applied to “devote and give assistance to any person, organization of Macau Government, Hong Kong Government, the Government of the People’s Republic of China or elsewhere for charitable or public purposes through the act and/or conduct and/or the promotion of the Donee”[153].

364.The Deed of Gift stated that R2 absolutely transferred to MVF the 6,000 share by gift subject to the discharge of the pending civil suits.  On the other hand, it was also stated therein that the parties acknowledged and declared that R2 was the lawful and sole beneficial owner of those gifted 6,000 shares with the full right and power to dispose of those shares as she may think fit.

365.It appears that the civil suits referred in the Deed of Gift were mainly the WM Litigation.  Thus, it seems even if WM were to succeed in this litigation R2 would still be free to dispose of not more than 1/3 of her assets.

366.The Deed of Gift was signed on 27 June 2005 by R2 in her personal capacity, the husband as director of MVI (Panama), and Dr Alves, as a member of the Executive Committee for MVF, and they signed in the presence of a solicitor at CK Mok & Co.  It was further duly stamped on 30 June 2005.  I find that the Deed of Gift was indeed executed on 27 June 2005, although the wife seemed to raise an issue about this.

367.Mr Li submitted that MVF had no valuable assets and was a bare shell by “not” claiming the ownership of any shares in the Macau Corporation[154]. It is not clear as to what was meant by R3 not claiming the ownership of the shares.  As the gift of the 6,000 shares was expressed to be absolute, and according to my understanding, even if R2’s only assets were those 6,000 shares, she could still dispose of at least 2,000 shares, and thus MVF should have considerable valuable assets.  In any event, even if I were wrong, it seems that R2’s and R3’s position appears to be in conflict with each other, as R2 had given those shares absolutely to R3, and R3 seemed to be saying it was not claiming those shares.

368.According to the Companies Registry records available before this court, after this gift, there were no audited financial statements of MVF.  No management accounts had been produced and there was no evidence how this gift was recorded in the books of MVF.  There was no independent valuation submitted in respect of this company, but in any event, I am not satisfied that the company has no assets or of no value, even though some of those assets may be encumbered.

369.The wife’s case in relation to MVI (Panama) and Cheung Kong/MVI (HK) and MVF was confusing. Her initial case seemed to be that the husband was in fact the owner of all the 10 bearer shares of MVI (Panama)[155]. Then she said that the husband had entrusted her to take care of the formation of Cheung Kong/MVI (HK) at the time and that she was responsible for choosing the names of Cheung Kong[156]. She was thus fully aware of the set up and at that time structure of Cheung Kong/MVI, in that the husband only held 50% interest in those 10 bearer shares of MVI (Panama), as the husband was then holding 1 of 2 subscriber shares.

370.But the wife seemed to maintain that the husband owned all the shares of MVI (Panama) and MVI (HK), and she relied on the 3 Minutes.  I assume that this was because the 2^nd Minute resolved that the 10 bearer shares be converted to registered shares to be held in the sole name of the husband before the transfer to Cheung Kong/MVI (HK).  Further, the wife claimed that R2 held/holds her 90% interest in MVI (HK) in trust for the husband[157]. Then when her solicitors wrote to solicitors for R3, Cheung Kong/MVI (HK), and MVI (Panama) in June 2011, the wife’s then case seemed to be that as the husband was the sole irrevocable authorized signatory of both MVI (Panama) and Cheung Kong/MVI (HK), the husband was thus in full and absolute control of 6,000 shares in Macau Corporation held by MVI (Panama) and subsequently by MVI (HK)[158] .

371.First of all, all the 6,251 shares in the Macau Corporation were held by MVI (Panama) until the Deed of Gift, and thereafter, 6000 shares were then gifted to MVF.  These 6,251 shares were never held by MVI (HK).

372.After R2 was joined, there was an order for discovery against her[159]. She was ordered to produce “ full and complete historical company searches, that is all annual company searches and also documentary evident not filed with the company registry from date of incorporation up to present date including but not limited to all changes in directors and/or shareholders” of 4 overseas companies, including MVI (Panama).  Further, in respect of MVI (Panama), she was ordered to produce all minutes and/or board resolutions which were executed by the husband and/or R2 since date of incorporation, and also last 3 sets of audited and/or management accounts, power of attorney etc.  Anyway, these were not produced.  The information available came mainly from the 3 Minutes.

373.The 1^st Minutes seemed to indicate that both R2 and the husband were the holders of the then 10 bearer shares of MVI (Panama).  In fact, from those documents which were produced by the husband in relation to R2’s application for a Macau gambling licence, it appears the then position of the husband and R2 was that MVI (Panama) was owned by both of them[160]. It was not clear as to why those 10 bearer shares were registered in the sole name of the husband first, for about half an hour, before he transferred them to MVI (HK).  Having said this, I do not find that there was sufficient evidence to say that the husband held all the beneficial interest in the 10 bearer shares. 

374.In about April 2005, there was a further allotment of shares made by Mr H of the Macau Corporation[161]. It appears that R2, as a shareholder of the Macau Corporation exercised an option to purchase 10 shares at MOP 1m each[162]. The wife seemed to say only 2 shares were purchased and they were purchased by the husband and R2[163]. At that time, as the 1983 transfer was not recognized by the Macau Corporation, R2 remained the shareholder in the books of the Macau Corporation, and any option to purchase would have to be exercised by, or through her.

375.The Deed of Gift was entered into on 27 June 2005, when the relationship between the spouses had not yet broken down irretrievably.  R2 signed personally the Deed of Gift. In the Deed of Gift, the husband acknowledged that R2 was the sole beneficial owner of the shares in the Macau Corporation. 

376.Thus, although documents above mentioned which showed that the husband could have held an interest in MVI (Panama) prior to the Deed of Gift, as at the date of the Deed of Gift, I accept that R2 was the sole beneficial owner of the shares in the Macau Corporation, subject then only to the WM Litigation and/or other encumbrances, but subject to those encumbrances, those shares had been gifted to MVF.  The shares belonged to MVF and subject to prohibition of distribution as stated in its memorandum of association[164]. Having said this, on 30 June 2011, R5 and R6 have jumped into the arena by issuing the HC Action to claim a declaration that R2 and MVI (Panama) in fact held the beneficial interest in the 6,251 shares in the Macau Corporation and also the 45,050 shares in ST Shipping in trust for R5, and sought, among other things, an order that the husband, R2, and MVI (Panama) to account for all income and profits derived from these shares, and to restrain them to dispose of, encumber or otherwise dealing with these shares, and any income and/or profits arising therefrom.

377.So far as the remaining 251 shares in the Macau Corporation and the 45,050 shares in ST Shipping are concerned, they remained being held by MVI (Panama).  They are of course now subject to the above HC Action.  I have already indicated at the commencement of this trial that I do not propose to make any determination of the beneficial interest of those shares which are subject to the HC Action and the WM Litigation.

378.Obviously, if the claims by WM and now BM in the WM Litigation and by R5 and R6 in the HC Action should fail, 251 shares in the Macau Corporation and the 45,050 shares in ST Shipping will remain with MVI Panama.  Through MVI (HK), R2 held 9,000 shares/90% of the interest in MVI Panama.  The husband was holding 1,000 shares/10%. Finally on 23 July 2009, the husband executed a declaration of trust of his 1,000 shares in MVI (HK) in favour of WS (BVI)[165] (“Declaration of Trust”).

379.New companies then came into picture.  On 16 April 2010, the husband resigned as director of MVI (HK) and a new company GS Ltd was appointed in his place. Further, two further directors were appointed, MS Ltd and MVI (Panama) were appointed as a directors.  The husband remained the secretary.  Then on Disposition Day, the husband transferred his 1,000 shares to WS (BVI).  On 20 July 2011, Ms Lo, WS (BVI) and AC Nominee (HK) were added as directors.  Then to complete the removal of the of the husband’s name from MVI (HK), he resigned as the secretary on 21 July 2011 and AC Oversea Nominee was then appointed as secretary.

380.Thus, the current structure of this company is that there are now 5 corporate directors, GS Ltd, MS Ltd, MVI (Panama), AC Oversea Nominee, WS (BVI), and Ms Lo being the only individual director[166], with AC Oversea Nominee as corporate secretary.  R2 remains the individual shareholder holding 9,000 shares and the remaining 1,000 shares are now held by WS (BVI).

381.So far as R2’s 9,000 shares are concerned, it seems according to the husband’s and R2’s common witness Mr Lai’s evidence, when he prepared the declarations of trust, he in fact prepared two sets, one to be signed by the husband and one was to be signed by R2 declaring that she held her 9,000 shares on behalf of WS (BVI).  It was not clear whether R2 subsequently signed this declaration.  If so, then the shares of MVI (HK) would now all be held by WS (BVI).

382.The wife appeared at one stage to challenge the authenticity or the date of signing of the Declaration of Trust being on 23 July 2009 since the copy initially produced by the husband had no stamp duty chop nor apostille[167].  The husband then produced copy which was stamped on 19 March 2012, but this copy bore an apostille and certification by the Registrar of the High Court on 28 July 2009[168].  Although the Declaration of Trust was only stamped much later, I accept that it was signed on 23 July 2009. 

383.There had been no application by the wife to set aside the Declaration of Trust, and had there been such an application, WS (BVI) would need to be served.  As there had been no such application to set aside the Declaration of Trust, by Disposition Day, on the face of it, the beneficial interest of the 1,000 shares in MVI (HK) had already been vested in WS (BVI).  The transfer on the Disposition Day was merely of the legal title of those 1,000 shares and I am thus unable to say that this transfer had had the consequence of defeating the wife’s claim for financial relief.  I will therefore not make any order to set aside the transfer on the Disposition Day, as sought for by the wife.

384.To summarise, the latest position so far as MVI (HK) is concerned, 1,000 shares are held by WS (BVI).  As to the remaining 9,000 shares, they are either held by R2 for herself or, if she had also signed the declaration of trust prepared by Mr Lai, then at present, R2 is holding the 9,000 shares in trust for WS (BVI).

385.Like the other companies, no audited financial statements of MVI (HK) had been produced and there was no valuation of this company.  According to the wife, the 6,251 shares in the Macau Corporation and the 45,050 shares in the ST Shipping were worth about HK$5.7 billion as at 30 August 2010[169]. This was challenged by R2 and R3.  Whatever the value, I am satisfied that these shares are worth a substantial sum.

386.Turning now to the new companies on the scene, MS Ltd was incorporated on 29 April 2005 with R2 as the sole director and sole shareholder holding 1 share of HK$1.  According to what the husband said during the trial, MS Ltd was a company used by R2 to hold 100 (or 10) shares in the Macau Corporation and it had no business activities.  Anyway, it seems MS Ltd was incorporated to hold the additional shares purchased by R2 when she exercised her option in April 2005 as mentioned earlier.

387.Apart from those additional shares, there was no information as to what other assets were held by MS Ltd.  The husband claimed he was not sure whether MS Ltd held any bank accounts.

388.The secretary of MS Ltd was Mr So.  The husband was appointed as a director in May 2007 but he resigned on 16 April 2010 and another company namely GS Ltd was appointed in his stead. MVI (Panama) was also appointed as a director on the same date.  The three directors were then GS Ltd, MVI (Panama), and R2, who remained the sole shareholder.  There had been no change in these particulars since up to the date of the last annual return as at 29 April 2011. I am satisfied that on the face of it, R2 was the sole beneficial owner of this company.

389.There was no information as on GS Ltd and its assets are unknown. 

THE 3 OFFSHORE COMPANIES

390.I now come to the 3 offshore companies which were acquired more or less at the same time in May/June1997, said to be formed to transfer ownership of assets overseas in light of the imminent handover of Hong Kong back to China (“3 Offshore Companies”).  I accept that that was the intention of acquiring these offshore companies. The 3 Offshore Companies are:

Abbreviated Name	Date of Incorporation/Acquisition
SB (Bahamas)	7 May 1997
WS (BVI)	13 June 1997
AC Oversea (BVI)	13 June 1997

391.The beneficial ownership of these 3 offshore companies is the crux of this application. In particular AC Oversea (BVI) and WS (BVI) were the transferees on the Disposition Day of the shares held by the husband in a number of the companies in the AC Group.

392.The history of the production of the documents and/or information in relation to the 3 Offshore Companies were set out in my 2^nd Ruling[170].  It was not until his 12^th affirmation filed in March 2012 that the husband produced a letter from R2’s solicitors BC Chow & Co which enclosed a letter from Mr Seeger to R2 dated 4 January 2012.  In this letter from Mr Seeger, he had enclosed a Certificate of Good Standing, Register of Members, and the Register of Director showing the registration of directors and shareholders of the 3 Offshore Companies (“MH-80”)[171]. 

393.The wife then sought the minutes executed by R2 on various dates and further sought a complete ‘historical’ search of the 3 Offshore Companies.  The husband responded by saying they were in the possession of R2.  The wife obtained leave to issue a subpoena on Offshore Incorporations HK Limited (“OIL (HK)”), from which company the 3 Offshore Companies were acquired initially, requiring OIL (HK) to produce full historical record of the companies since incorporation.  Since the registered agents for the 3 Offshore Companies were not OIL (HK), but were OIL (BVI) and OIL (Bahamas), those documents were not in the possession of OIL (HK).

394.Eventually, R2 was joined and was ordered to produce historical searches and full record of the 3 Offshore Companies (“Discovery Order”).  Pursuant to the Discovery Order, R2 then produced certain companies documents and/or information in her 2^nd affirmation in October 2012.  Subsequently, as R2 failed to attend the trial for cross-examination, this court had excluded all her affirmations as evidence[172]. 

395.Thereafter, there was a further application being made by the wife on 8 October 2012.  Pursuant to this application, the husband produced various documents on 15 October 2012 during the trial (“MH-303”)[173]. These consisted of 15 minutes of shareholders meetings held on 27 June 1997, 30 June 1997, 31 July 2001, 17 April 2010, 1 June 2010 in relation to the 3 Offshore Companies signed by R2 (“Offshore Minutes”) and 4 Powers of Attorney given by R2 to Mr Seeger (“4 P/As”), respectively a General PA signed by R2 on 4 June 2001, a Special and a General PA signed by R2 respectively on 29 March 2012, and the final General PA signed by R2 on 8 June 2012.  The documents in MH-303 in fact had been earlier exhibited in R2’s 2^nd affirmation. The wife then made an application to exclude these Offshore Minutes and the 4 P/As, as the court had not allowed R2’s affirmations to be admitted.  The wife’s application was refused orally by this court on 16 October 2012, and the reasons for the refusal could be gleaned from the subsequent 2^nd Ruling[174]. 

396.The wife did not give up.  She then sent copies of those Offshore Minutes and 4 P/As to a handwriting expert instructed by her and after obtaining a preliminary report, she made a further application for her handwriting expert to inspect and examine forensically the originals of some 15 minutes of the 3 Offshore Companies and also the 4 P/As.  I dismissed her application and my reasons have been set out in my 2^nd Ruling[175].

397.In Mr Chow’s Closing Submissions, he challenged the company documents in particular the Offshore Minutes and asked the court to consider the weight this court should place on those documents produced[176]. There were two grounds set out.  First, the wife queried the source of the documents namely their production by Mr Seeger as opposed to R2[177], as the Offshore Minutes were all purported to be signed by R2 unwitnessed, and the wife was unable to cross-examine R2. the documents produced were not a complete historical search and there were missing links.  

398.After my 2^nd Ruling, Mr Seeger gave evidence by video link.  He confirmed what he had said in his affirmation of 5 November 2012[178]. He was first asked by Mr Li in examination-in-chief where he obtained the companies documents for the 3 Offshore Companies produced by him, his response was that those documents were either provided from Hong Kong to his office or they came from OIL (BVI)/OIL (Bahamas).  He then said he received the Offshore Minutes from Hong Kong.  When Mr Li asked him, as an example, minutes of the shareholder’s meeting on 27 June 1997 of SBI (Bahamas) signed by R2, Mr Seeger’s reply was he did not recall something that happened in June of 1997, and he then said he did not receive that minute “around 2012”. 

399.When he was later cross-examined by Mr Chow as to when he first saw the Offshore Minutes, his response was that he “presumably” saw them shortly after execution.

400.When asked, by way of example, whether the Registers of Directors and the Registers of Secretary regarding SBI (Bahamas) were prepared by him or whether he had kept them or he had ever been in possession of the originals, Mr Seeger’s reply was “I have seen these documents before.  I believe we - - we obtained them from OIL.  That’s my recollection”.  I find his answer odd in that he did not seem to even remember where the documents came from even though it was he who produced them earlier in 2012.

401.Mr Seeger’s replies in respect of all the Offshore Minutes were similar, namely what he said was: “Documents come in typically not too long after they are executed, we receive them and send them to OIL”.

402.I find Mr Seeger answers vague and evasive. It was not at all clear when the copies of those Offshore Minutes produced by him came to his possession, or how. All he said was it was not around 2012.

403.It seems that after the wife obtained the Discovery Order against R2[179], R2 did not instruct her present solicitors BC Chow & Co to write to the registered agents direct.  Instead, R2 instructed BC Chow & Co to write to Mr Seeger to request for information on the 3 Offshore Companies, who then replied in the capacity of R2’s lawyer.   If R2 were indeed the sole ultimate beneficial owner, there was no reason why her solicitors could not have written to the registered agents direct immediately after the Discovery Order to seek the relevant information.  The sequence of production appeared to be as follows:

10.11.11	OIL (BVI) certified Registers of Members of WS (BVI) and AC Oversea (BVI)
10.11.11	Certificate of Good Standing of AC Oversea(BVI)
22.11.11	Certificate of Good Standing of WS (BVI)
01.12.11	Certificate of Good Standing of SBI(Bahamas)
03.01.12	OIL (Bahamas) certified Register of Members of SBI (Bahamas)
04.01.12	Mr Seeger wrote to R2, producing the abovedocuments
….03.12	MH-80 produced by the husband
10.08.12	Discovery Order
23.08.12	Mr Seeger wrote to registered agents
27.08.12 20.09.12	Mr Seeger wrote to 3 archives companies According to Mr Seeger, date he received letter from BC Chow & Co requesting for information
04.10.12	Mr Seeger wrote to BC Chow & Co producing the Offshore Minutes and the 4 P/As
31.10.12	Mr Seeger wrote to BC Chow & Co stating that the original of the Offshore Minutes had been sent to the registered Agent

404.It was Mr Seeger who had signed the letters to the registered agents on 23 August 2012 to seek full and complete historical file[180]. Mr Seeger then in his capacity as R2’s lawyer, sent a letter to BC Chow & Co on 4 October 2012 claiming to “address” the matters raised by BC Chow & Co[181]. However, at the trial, Mr Seeger then said he was not the lawyer who actually had any contact with OIL (BVI)/OIL (Bahamas) over those documents which were produced by him.  It was his colleague who appeared to be the gentleman who was sitting in the same room when Mr Seeger was giving evidence by video link the 1^st day.

405.So far as SBI (Bahamas) is concerned, from the Register of Members of SBI (Bahamas) produced by Mr Seeger[182], one could see the following:

SBI (Bahamas)	30/06/97	1 bearer share(held by R2)
	31/07/01	1 share- R2
	31/07/01	1 share-WS (BVI)
	01/06/10	1 share-AC Oversea (BVI)

406.One can then see from the shareholders’ minutes relating to this company purportedly signed by R2 on 30 June 1997[183] that it was resolved on that day that the bearer share was to be held in safe keeping by R2 as the sole holder of the only bearer share, and no other shares of any type existed as on that day.  On the same day, R2 was also appointed as director of this company[184].  Then, according to the shareholders’ minutes purportedly signed on 31 July 2001, it was resolved that the one bearer share be transferred into the name of R2, and 1 additional share was allotted to WS (BVI).  In the shareholders’ minutes signed on 17 April 2010, purportedly signed by R2 and Ms Lo on behalf of WS (BVI), it was resolved that the resignation of the Secretary/Director given by the husband was accepted with immediate effect, and that AC Oversea (BVI) and WS (BVI) was appointed as new directors, and WS (BVI) was the new secretary.  By another minute of a meeting on 1 June 2010, 1 further share was allotted to AC Oversea (BVI).

407.The Register of Directors of SBI (Bahamas) appeared to have been certified as a true copy on 1 December 2011 and yet the Register of Members appeared to have been certified as a true copy only a month later on 3 January 2012.  There was no explanation as to why they were not certified on the same day.  Further, someone must have approached OIL (Bahamas) for copies of these registers, but no communications to or from OIL (Bahamas) had been produced.

408.None of the Offshore Minutes produced by Mr Seeger had been certified as true copies by the registered agents, if according to Mr Seeger, all original executed minutes were sent to the registered agents.  Mr Seeger only produced 3 letters dated 23 August 2012 sent by him to the registered agents.  These were only sent about 13 days after the Discovery Order.  If Mr Seeger or his colleague had obtained those Minutes from OIL (Bahamas), there should be a reply from OIL (Bahamas) enclosing those Minute, but again this was not produced.  What was also clearly missing among those minutes relating to SBI (Bahamas) was the minute appointing the husband as director/secretary.

409.As for WS (BVI), as seen from the Registers of Members, this appeared to have been certified as a true copy by the registered agent on 10 November 2011[185]. The information thereon was:

WS(BVI)

14.10.11

1 share - R2 1 share - AC Oversea (BVI) 1 share - SBI (Bahamas)

*per executed Minutes by R2

31 July 2001: share transfer of 1 bearer share held

by R2 transferred to her name

31 July 2001: allotment of 1 share to AC Oversea (BVI)

1 June 2010:  allotment of 1 share to SBI (Bahamas)

410.Finally for AC Oversea (BVI), the following can be seen from the Register of Members which was certified as true copy on 10 November 2011[186]:

AC Oversea (BVI)

14.10.11

1 share - R2 1 share - WS (BVI) 1 share - SBI (BVI)

*per executed Minutes by R2

31 July 2001 : share transfer of 1 bearer share held by R2 transferred to her name

31 July 2001 : allotment of 1 share to AC Oversea (BVI)

1 June 2010 : allotment of 1 share to SBI (Bahamas)

411.Mr Seeger had stated in his letter to BC Chow & Co of 4 October 2012 that R2 was the sole individual shareholder of the 3 Offshore Companies, and was “effectively the sole and exclusive owner of all three companies”.

412.I accept that under the relevant BVI and Bahamas legislations, the registers of members are prima facie evidence of the legal title of the shareholders.  However, so far, as the Registers of Members are concerned, they only showed R2 holding 1/3 of the legal title of those companies.  The Registers did not show the ultimate beneficial owners of any of the offshore companies.

413.In any event, I accept what Mr Chow submitted on behalf of the wife, those documents produced by Mr Seeger were not complete records.  What were also clearly missing was documents registered with the offshore registered agents as to the “ultimate beneficial ownership” of the 3 Offshore Companies.  Further, the minutes recording the dates that the husband was appointed as an individual director were also clearly missing.

414.What Mr Seeger said was that the Offshore Minutes were sent to him from Hong Kong.  In any event, if the originals of those Offshore Minutes were then forwarded to the registered agents as stated by Mr Seeger, there was no reason as to why Mr Seeger/the husband/R2 could not have obtained certified true copies of those Offshore Minutes from the registered agents together with a confirmation as to when the originals were filed/received by them. There was no independent confirmation from the registered agents that those company documents produced by Mr Seeger formed the complete record or all the information in the files kept by the registered agents for these 3 Offshore Companies.

415.As pointed out by Mr Chow, R2 was supposed to be a director of the 3 Offshore Companies upon acquisition, pursuant to minutes produced but there was no entry of her being a director on the Register of Directors.  Yet on the other hand, the husband was reflected on the Register of Directors as a director, but there was no minute evidencing his appointment.

416.As a result of the various queries raised by the wife, BC Chow & Co then wrote on behalf of R2 to the registered agents on divers dates in November 2012, asking for the originals of the Offshore Minutes, the reasons why R2 was not entered on the Registers of Directors as a director, and whether there were minutes appointment the husband as a director[187]. OIL (Bahamas) replied to say they regret to advise they were unable to comply with the requests for information.  There was no reply from OIL (BVI) at all.  I find it strange that if R2 were indeed the sole ultimate beneficial owner of the 3 Offshore Companies, the registered agents would refuse to provide information as requested from her lawyers.

417.According to Mr Seeger, the Register of Members produced by him was correct as at 4 October 2012.  What they showed was for about a period of 9 years between 31 July 2001 and 1 June 2010, R2 and one of the 3 Offshore Companies were equal shareholders, each holding the legal title to 1 share.  It was only in June 2010,  after the wife had instituted the 1^st Proceedings, that there was a change, and a 2^nd Offshore Company was added, with the effect, each holding 1/3 of the legal title.  No satisfactory reason was provided by the husband or R2 as to why suddenly there needed to be  an addition of another Offshore Company as a shareholder  in June 2010, if according to the husband, R2 and Mr Seeger, R2 was the sole beneficial owner of all the companies anyway.

418.To summarise, I find that the documents in relation to the 3 Offshore Companies were produced on a selective basis, and they did not represent the all the documents filed with the registered agents since the acquisition of those companies. What was clearly lacking was independent evidence on the ultimate beneficial ownership of the 3 Offshore Companies.  I find that the husband had adopted a “catch me if you can” attitude, and that he had not provided full and frank disclosure of  the ultimate beneficial ownership of these companies, which he was under a duty to do so.  Both the husband and R2 knew perfectly well that the crux of these proceedings was the beneficial ownership of these companies.   If R2 were indeed the sole ultimate beneficial owner, all that was required from the registered agents was a simple confirmation of this. Having considered all the documents, I am entitled to draw adverse inferences against the husband and R2, and I find that both the husband and R2 held/hold beneficial interest in all 3 Offshore Companies.  I find that that the husband’s beneficial interest in these 3 Offshore Companies was/is no less than 50%.

PIERCING THE CORPORATE VEIL

419.Even though Mr Seeger held the 4 P/As from R2 and he claimed he was in charge of “daily operation” of the 3 Offshore Companies, he admitted he had no control over the funds of the 3 Offshore Companies.   Ms Lo said she was the one who dealt with the transfers and withdrawals of funds of various companies, in particular WS (HK) and ACE, in accordance with standing practice/instructions from R2, and that she would only seek R2’s approval in relation to special items of expenditure.  Ms Lo was clearly not the one who had control of the funds of the companies as she was only following instructions.  Up until about 2009, the funds for various expenses of the companies were mostly transferred through accounts held in the husband’s name which he claimed he held in trust for R2.  Having considered all the evidence, it is my finding that the husband was the person who mainly had and will continue to have the control over all the companies, both in terms of their management and their finances.  This is particularly so when now R2 is of advanced age and hospitalized and said to be in such ill health that she was not even able to give evidence by way of video link.

420.In the wife’s Part IIA application, she sought transfer of property orders in respect of properties held in respect of the Grand Panorama Flat, the Estoril Court Flats and the Hunghom Offices held in the names of WS (HK) and ACE.  Mr Chow submitted that this court should pierce the corporate veil of the companies of WS (HK) and ACE, and make such transfer of property orders in favour of the wife.

421.The principles on piercing the corporate veil have been set out in the case of Faisa Ben Hashem v Abdulhadi Ali Shayif & Others[188] and briefly, they are:

(i) Ownership and control of a company are not of themselves sufficient to justify piercing the veil;

(ii) The court cannot pierce the corporate veil, even where there is no unconnected third party involved, merely because it is thought to be necessary in the interests of justice;

(iii) The corporate veil can be pierced only if there is some “impropriety”;

(iv) The court cannot, on the other hand, pierce the corporate veil merely because the company is involved in some impropriety. The impropriety must be linked to the use of the company structure to avoid or conceal liability;

(v) It follows from all this that if the court is to pierce the veil it is necessary to show both control of the company by the wrongdoer(s) and impropriety, that is (mis)use of the company by them as a device or façade to conceal their wrongdoing.

(vi) A company can be a façade even though it was not originally incorporated with any deceptive intent.

422.The latest case in England concerning piercing the corporate veil of companies in financial applications in family proceedings is the case of Petrodel Resources Ltd & Ors v Prest & Ors[189], the appeal of which to the Supreme Court had just been heard early in March this year, and the judgment is imminent.

423.In Petrodel, the trial judge Moylan J did not find that there was sufficient evidence of any impropriety or that the conditions for piercing the corporate veil were satisfied, but he then proceeded to make transfer of property orders, which were part of the assets of and belonged beneficially to the companies that respectively owned them.  He held that the husband in that case Mr Prest had sole control of the companies as their 100% owner and was therefore the beneficial owner of those assets and so ‘entitled’ to them.

424.The majority of the Lord Justices held that Moylan J was wrong in equating the companies with Mr Prest and regarded the companies’ assets as his.

425.In the present case, the burden was on the wife to demonstrate that there had been impropriety on the part of the husband and R2.  WS (HK) and ACE were acquired for the purchase of landed properties in Hong Kong and the use of a corporate vehicle to purchase property in Hong Kong is not an uncommon practice.  In fact, for ACE, all along the wife and Madam Lai were registered shareholders. In any event, I find there was no sufficient evidence of any impropriety.  The 3 Offshore Companies were set up just prior to the handover in 1997, for primarily wealth protection, which did not seem to be challenged by the wife anyway.  I do not find there was sufficient evidence of any impropriety.  I therefore find that the conditions for “piercing the corporate veil” of WS (HK) or ACE were not satisfied.

426.Nevertheless, Mr Chow’s submission was that this court should follow what Moylan J did, as upheld by  the dissenting Thorpe LJ in the Court of Appeal, and make transfer of property orders in relation to those properties held by WS (HK) and ACE.   I do not find that I am able to do so because firstly, in accordance with my earlier finding, the husband is not the sole beneficial owner of the two companies, and he is not entitled to the assets of these two companies, and secondly, in my view WS (HK) and ACE should have been joined if any orders were to be made affecting the assets of the companies.

L.   THE HUSBAND’S CAR COLLECTION

427.The wife alleged that throughout the marriage the husband had been an avid collector of classic/exotic cars including an extensive collection of Ferraris, and that many of his cars were held in museums in USA.  According to the wife, these cars were also from time to time, stored in the warehouse at the Hunghom Offices, car parks/car parking lots in Hong Kong such as at the Estoril Court and in Mongkok.   

428.The husband denied any ownership of these cars, and said they were actually owned by R2, and that R2 had entrusted Mr Seeger to handle all the purchases and sales of such cars.

429.The wife’s evidence was based on mainly 3 sources.  Firstly her personal knowledge of the collection as gathered from what the husband had told her during the marriage.  Secondly, it was derived from her friend and godfather of her children, Mr Grover, and thirdly, from another friend Ms Ku, who was the goddaughter of Madam Lai.

430.So far as her personal knowledge was concerned, she said the reason for the purchase of the Hunghom Offices was that there was a special lift to load and unload the collection of the husband’s cars.  Further, she said in about 1993/1994 the husband had purchased about 20 Porsches from Jebsen, a dealer in Hong Kong, and many of them were parked at carparks at Estoril Court.  Subsequently, according to her, there was litigation between the husband and the dealer Jebsen regarding these Porsches, although she was not able to provide supporting evidence of this.

431.The wife had produced one photograph of her and her baby daughter taken at the Hunghom Offices in 1995.

432.Further, the wife had said that in the summer of 2005, the husband had told the wife to take the children to the Blackhawk Museum, and another car museum in the USA, and he had told the children that most of the cars there belonged to him. Thus, many photographs were taken by the children.  The wife had further said in order to showcase these cars, the husband had one point considered the development of the Car Museum Project in 2003 which was mentioned earlier in this judgment.  

433.The wife had through Mr Grover obtained information on websites publishing the husband’s car collection.  The husband responded by saying these websites mentioned those cars being owned by some one with the same name, it was not indicative of his ownership.  The husband then instructed his US lawyers Akin Gump to prepare an analysis/ investigation report dated 11 May 2012[190], and a supplemental report dated 9 June 2011[191]. These reports purported to show that the husband had never personally owned any of the cars, as alleged by the wife.

434.Akin Gump were representing the husband, and further they were his lawyers in applying for a subpoena against one of Mr Grover after he made an affirmation for the wife.  I would not have thought Akin Gump would be in a position to give any independent opinion.   Anyway, they had produced letters dated May 2012 from the Blackhawk Museum and the Auto Collections @the Imperial Palace in Las Vegas which confirmed that they did not have any cars on display or on consignment, belonging to anyone, with the husband’s name[192]. It is not clear what names of the husband’s were provided to the two museums by Akin Gump, since the husband had used many names, three of which appeared on the heading of these proceedings, and so far I could see, none of those corresponded with the name in the letters from the Blackhawk Museum or the Imperial Palace.

435.The wife’s main witness Mr Grover had sworn two affidavits in support of the wife’s case on the husband’s classic car collection which according to Mr Grover, would be worth more than US$50,000,000 at current values.  The husband then issued an ex parte application to the US Court in California for the issuance of a subpoena against Mr Grover to testify at a deposition, which was granted on 1 June 2012[193]. Not long thereafter, notices to cross-examine were also served on Mr Grover for the trial in Hong Kong.  Deposition was taken from Mr Grover on 18 and 20 September 2012 in San Francisco, lasting about 7 hours in total and the entire transcript was about 350 pages and contained in a box file of its own[194]. This was of course only about one month before the trial was due to commence in Hong Kong.   Eventually, on application by the wife, I granted leave for Mr Grover’s deposition transcript to be admitted as evidence, and leave for Mr Grover to be cross-examined by way of video-link.

436.I find the husband’s application and the taking of deposition from Mr Grover in the USA unnecessary and cost-wasting.

437.Mr Grover was a retired architectural space planner living in California, and he collected classic cars and motorcycles.  He claimed to be knowledgeable with major car dealers and the market in the trading of classic cars in USA.  His wife met the wife when the wife was performing in San Francisco in 1987, and the wife later became god-mother of his daughters.  Mr Grover met the spouses when they went to San Francisco in 1991.  Thereafter, according to Mr Grover, the wife called him from Hong Kong and asked him to help the husband as the husband had a problem with his purchase of over 20 cars from a Ferrari car dealer who was refusing to release the cars or title deeds to him.  Apparently, the husband had been asking Ms Ku to handle this problem, but decided that she was not able to handle the problem alone.

438.Mr Grover said the husband then provided a list of the cars to him, and a power of attorney prepared by his lawyer Mr CK Mok in Hong Kong.  Mr Gover eventually collected the cars from the dealer, and in view of this, he gained the husband’s trust and he took over from Ms Ku to become the husband’s agent in his classic car dealings. He further said that the husband’s partial collection of his cars was subsequently displayed at the Blackhawk Museum.

439.Then in around 1992 when Mr Grover was in Hong Kong, he claimed that the husband showed him his collection of cars.  During the deposition, Mr Grover had aid he went to Estoril Court, and that the husband had told him that he had 25 brand new right hand drive Porsches on the second level of the parking lot.  Mr Grover said he did not count, but saw quite a few of cars but they were covered[195]. As they were covered, he did not see the actual Porsches.  He then said he was driven by Mr Au to a warehouse in Mongkok and saw about 12 Ferraris there and he had also seen a Jaguar, a Rolls Royce and a Bentley and others at the multi parking floors at the HungHom Offices. 

440.Mr Grover further said that in December 1993 when he came to visit Hong Kong, he took all the title deed of those cars he had secured for the husband in USA to Hong Kong and had delivered those to the hsuband.

441.By later 1993, the relationship between Mr Grover and the husband started to fade. According to Mr Grover, he continued to be the agent for the husband in securing his cars until about 1994. Then in about 1994, the husband started litigation with the US Ferrari car dealer, and at this time, Mr Seeger appeared on the scene. Mr Grover said Mr Seeger asked for all his files on the cars for photocopying.  According to Mr Grover, he sent over all the originals of his files, but since then despite his repeated demands, Mr Seeger failed to return his files.  This marked his final fallout with the husband.

442.Mr Seeger’s evidence on the other hand was simply that Mr Grover telephoned him one day and told him that the husband had owed him money for the favours he had done for the husband.  Mr Seeger said he then replied it was none of his business, and denied that he had ever received the original files from Mr Grover. Mr Au also gave evidence on this issue and denied showing Mr Grover any cars as alleged. 

443.Although Mr Seeger himself may not have personally received the original files on the information of the cars from Mr Grover, I accept what Mr Grover said, that he did send his original files to Mr Seeger’s office, at the request of Mr Seeger on behalf of the husband.  I accept that Mr Gover was probably upset at the husband over the way he felt he was treated by the husband, and in these proceedings, Mr Grover seemed to have gone out of his way to help the wife and to make investigation.  Although all the matters Mr Grover gave evidence on took place almost 20 years ago,  and his memory may have faded somewhat,  I do not believe he could be making up all what he said.  I accept Mr Grover’s evidence about his dealing with the husband over the cars.

444.Ms Ku had signed a witness statement [196] and attended trial personally to give evidence.  She described how she helped the husband in relation to his classic cars in the early 1990s, and how she had helped him in relation to his properties in the USA namely the Atherton Property and the Medical Building, and apparently another storage space in Belmont.  She said the husband was always late on sending her his payment for reimbursement of the expenses, and finally she told him that she was not able to assist him any more.  She claimed that she then flew to Hong Kong and handed over all his paperwork, bills and photographs to the husband’s secretary Ms Lo.  Ms Ku had first said this was in 1995.   Ms Lo denied what Ms Ku had said and in fact denied meeting Ms Ku at all.  Even if Ms Ku did make a mistake on the identity of the person to whom she handed over those documents, I accept what she said in relation to what she had done for the husband.  Again, I do not believe Ms Ku could have made all what she said, and I accept what she said in relation to what she had done for the husband over the cars. 

445.The husband ‘s case was that  he had purchased the cars on behalf of R2 from 1989 to 1995, and since about 1994/1995, the purchase  of cars was taken over by Mr Seeger.

446.According to the husband, he would buy from auction houses such as Christie’s, Bonham’s and R & M. The husband had admitted that he was the bidder at these auctions, and that after a successful bid, the purchase price would be paid from a BNP account, which  was held in his personal name, but he alleged the account was in fact held in trust for R2 (“BNP Trust Account”).  After the purchase, he would arrange for the cars to be stored by a storage company.

447.Mr Seeger did not refer to any purchase of cars in his only affirmation which was filed at a late stage in the middle of the trial in November 2012[197]. When cross-examined, Mr Seeger seemed to have limited knowledge about classic cars or the purchase thereof.  When he was asked whether he had signed the relevant security agreements signed by AC Oversea (BVI) in relation to those cars charged for a loan facility, as reflected from the Registers of Mortgages, Charges and Other Encumbrances (“Register of Encumbrances”) from the registered agent, his answer was he could not recall.  Copies of the security agreements were never produced by him. 

448.The husband was indeed ordered to produce those security agreements in March 2012, and yet none were produced. Even if as Mr Seeger had said, they could be in his archives, there seemed to be no reason why he could not have obtained them from the registered agent, as these were filed with OIL (BVI).

449.Mr Seeger had said that “virtually all the cars were titled under AC Oversea (BVI)”.  On the other hand, my understanding of what the husband told this court was that the legal title of these cars would usually remain with the initial owners/first purchasers, and there would not be any changes in the registration of such legal title upon subsequent sales, as the cars were not meant for driving.   It is thus not quite clear what title documents Mr Seeger was referring to. In any event, no such title documents had ever been produced, and apart from the security agreements, there was no other independent documentary evidence linking the ownership of the cars to AC Oversea (BVI).

450.Mr Seeger had also said that the cars once charged under the security agreements were sold for around US$25 to $26m, and he claimed that the net sale proceeds were only about 40%.  Again, no documentation was produced by him.

451.I accept what Mr Grover had said, that his contact over the cars was with the husband, and not R2, whom he had only met twice on social occasions and did not have any in depth conversation with her.  I also accept what Ms Ku had said that she never met R2 and her contact was with the husband.  I find that in the early 1990s, the husband was the person who was solely responsible for the purchases of the  cars, and it was not R2.

452.AC Oversea (BVI) was only acquired in June 1997.  As shown on the Register of Encumbrances, there were 4 security agreements dated 17 September 2003 for loans amounting to about US$5.086m[198], and one security agreement dated 20 January 2004 for US$1.143m[199]. According to Mr Seeger, the charges on the cars were all discharged in October 2004, but the Register of Encumbrances was only updated in October 2011.  Anyway, according to Mr Grover, about 14 cars which he acted as “go-between” on behalf of the husband formed part of the cars subject to the charges on the Register of Encumbrances.  It seems at least by the time of those charges, those 14 cars were legally owned by AC Oversea (BVI).  

453.The present whereabouts of those cars subject to the security agreements are unknown, and it is not clear whether some or all of them had indeed been sold. There was evidence that as late as in 2007, two sums of US $2.2m were wired to ‘Blackhawk Collection’[200].

454.The wife had ascribed a value of something between HK$80.9m to about HK$460m for the cars.  I find there was no sufficient evidence of this.  Assuming what Mr Seeger said was correct, those cars held in the name of AC Oversea (BVI) under the security agreements were sold for US$25 to 26m, or @7.8 about HK 195m in October 2004, and the net sale proceeds were about 40%, the cars would still be worth at least about HK$78m in 2004.  

455.Another connected issue in relation to these cars was the Car Museum Project, which I have referred to earlier in this judgment.  Although this project came to nothing, I do not believe that the wife had made everything up in connection with this proposed project, including the prospectus and the submission of the Deloitte’s Report.  So far in these proceedings, the husband was the only person who was shown to have any expert knowledge in the collection of cars. I thus find that the husband was fully aware of the Car Museum Project.

N.   THE HUSBAND’S COLLECTION OF TIMEPIECES

456.As with the cars, the wife’s case was that the husband was an avid collector of antique watches, clocks and other timepieces (“Valuable Timepieces”).

457.The wife’s evidence was in relation to two periods.  The 1^st period of time was when the husband purchased Valuable Timepieces from a Swiss dealer Mr YYY, and the 2^nd was when the husband bought Valuable Timepieces from other sources, and ultimately consigned such items to Christie’s for auction.

458.The husband on the other hand denied any purchases of Valuable Timepieces were for himself. He said that all such items were purchased on behalf of R2.  His case was he had never owned any beneficial interest in these items.

459.In relation to the 1^st period, the wife said the husband had set up an offshore company called INGOTA in 1991/1992, with 2 independent directors to hold the title of the collection of the Valuable Timepieces he bought from dealers including Mr YYY.  In 1991, Mr YYY went into receivership, and because of this the husband had sent the wife and his dealer in England, a Mr Whyte, to fly to Switzerland to assist in taking possession and identification of the husband’s items from Mr YYY.  The husband had further instructed the wife to open safe deposit boxes in joint names of the wife, Madam Lai and INGOTA.   Thus, Madam Lai also travelled to Switzerland with the wife. This mission was duly accomplished by the wife.

460.In 1998, the wife, accompanied by her daughter and Madam Lai went to Geneva, London and Paris, and they went to Geneva to check on the safe deposit boxes and took photographs of the Valuable Timepieces for the husband.  She also went to check on his safe deposit boxes at Lloyd’s Bank in London where he had also stored some items.  The wife had said Madam Lai was one of the directors of INGOTA from about 1998 to about 2004.

461.Then in about 2004, the husband had asked the wife to go to Geneva to arrange for the shipment of the Valuable Timepieces, totaling  about 2,000 pieces, back to Hong Kong through Christie’s who would eventually sell them.  According to the wife, the husband had told her that he needed the money to fund the litigation against Mr H of the Macau Corporation.  Anyway, the wife and Madam Lai travelled to Geneva for over two weeks to handle this matter. The wife had described what she then did, and eventually the items arrived in Hong Kong around the winter of 2004. 

462.The husband’s initial evidence during cross examination was that he only assisted R2 in purchasing about 5 to 6 pocket watches from Christie’s in about 1992, and that R2 was responsible for her own investments having gone to the viewing of the auction houses herself since 1970.  According to the husband, the last piece he bought for R2 was in 1993/1994, although he accepted that he was the only contact point from the auction houses before the emergence of Mr Seeger. The husband was then asked if he knew of Mr YYY.  His reply was “I have heard of this name, but I don't recall”.  Then when asked if he had any relationship with him, he answered “no”.  When asked whether he had any business dealing with him, his answer was that “there was only one occasion in which he purchased a watch from Mr YYY on behalf of R2 but because of dispute the watch was not purchased”.  Then when the wife’s Counsel asked him whether he had personally purchased any timepieces from Mr YYY, his answer was an unequivocal “no”.   

463.It then turned out that the husband was being extremely economical with the truth when giving the above answers.  After the husband’s above answers, the wife’s Counsel produced copy of a judgment in an appeal in 1991concerning an action in which the husband, as plaintiff, sued Mr YYY (“YYY Judgment”)[201]. The action was indeed over a watch in which the husband claimed to have bought from a company called Habsburg in the judgment through Mr YYY.  In the judgment given by the then Sir Derek Cons JA,  the husband was described as a businessman with a keen interest in rare time-pieces, both antique and new, and to some extent was a “trader” in the same[202]. It was further stated that there was no dispute that the husband was a “regular customer” of Habsburg and that there had been “a long course of trade” between the husband and Habsburg for which Mr YYY was acting as an agent.

464.It is quite clear from the YYY Judgment that the husband had failed to make a full and frank disclosure of his long course of trade in timepieces, and I find that the husband was not telling the truth when asked about Mr YYY during cross-examination.

465.The husband did not deny that the wife and Madam Lai went to Geneva, but he said in his 4^th affirmation that instructions for them to go to arrange for the shipping was given by the AC Group, and those instructions did not originate from him.  The husband was again evasive and vague, since he did not mention which of the companies in the AC Group had given those instructions to the wife and Madam Lai. Eventually, he said in his 25^th affirmation that it was actually R2 who had instructed the wife and Madam Lai to collect the timepieces and he did not know of the arrangement.

466.I accept the wife’s evidence in this regard and find that it was pursuant to the husband’s instructions that she and Madam Lai went to Geneva to collect the Valuable Timepieces and arranged for them to be placed in safe deposit boxes in Geneva and London, and then she further arranged for the items to be shipped back to Hong Kong in 2004.

467.The husband had said that since 1995, he no longer had any hand in the purchase of time pieces and this would be left to Mr Seeger.  All Mr Seeger had said in his affirmation was that he was responsible for the acquisition and sale of all properties of AC Oversea (BVI).  No documentary evidence was provided by him.  Mr Seeger had said that he was authorized to do this through one of the 4 P/As signed by R2.  However, as pointed out by the wife’s Counsel, the4 P/As was given by R2, not AC Oversea (BVI).  In any event, I find Mr Seeger displayed little knowledge in timepieces and he had said he would consult experts including the husband.

468.Among the security agreements which appeared on the Register of Encumbrances was one dated 23 October 2003 in connection with a loan of about US $4.214m secured against numerous timepieces.  That security agreement was discharged on 5 August 2004[203]. According to Mr Seeger, the items subject to the security agreement were sold in 2004/2005 when the security agreement was discharged. Again no supporting evidence was provided by him.  In fact, what he said was again vague, as it appeared that those timepieces were then consigned to Christie’s.

469.According to Mr Seeger , he was the one involved in particular in negotiations and dealings with Christie’s in respect of the Valuable Timepieces owned by AC Oversea (BVI), and that he negotiated with Christie’s a US$20m line of credit that successfully removed the encumbrances on the cars.

470.Due to the husband’s failure to make full and frank disclosure, the wife had to apply for leave to issue a subpoena against Christie’s over the consignment of the Valuable Timepieces to them (“Consignment”).  Leave was granted and on the notional date of trial, a Ms Heaton of Christies produced several documents relating to the Consignment. These included:

(i) Schedule of Properties;

(ii) Settlement Statements;

(iii) Consignment Agreements;

(iv) Correspondences.

471.Arising from those documents produced, further questions were asked by the parties. This resulted in Ms Heaton eventually filing a total of 3 affidavits.

472.To summarise, the evidence contained in Ms Heaton’s 1^st affidavit showed that there was an anonymous account number 15092xx set up in 2004.   Then further documents were produced by Ms Heaton, among which was an internal Christies spreadsheet tracking pay down of the advances and reconciliation as at 31 December 2009.  The top of the internal spread sheet bore the remark of “Advances to Mr M”

473.In Ms. Heaton’s 2^nd affidavit, she explained further that although the husband was according to the computer the “actual client” of Christie’s, taking a global assessment of the documents produced, the account number 15092xx appeared to have been created to cover the 74 consignments outlined in the Consignment Agreements and that there were three parties named as joint sellers.  Although the client of anonymous account 15092xx was stated on their systems as the husband, it appeared this account was created to cover the advances and consignments outlined in various Consignment Agreements.

474.The 3 parties on the Consignment Agreements were the husband, AC International, AC Oversea (Nominee).

475.In Ms Heaton’s 3^rd affidavit, she produced the unredacted version of internal Christies spread sheet tracking pay down of the advances and reconciliation as at 31 December 2009.  She stated that as at 26 October 2012, there was no outstanding balance amount of principal or interest owed by the husband, AC Oversea (BVI) or AC International.

476.As at 26th October 2012, Christies were still in the possession of 9 items under the account no. 15092xx. However, the 9 items had been delivered to an agent acting on behalf of the client on 7th November 2012. All this happened during the trial, and yet neither the husband nor R2 disclosed this to the court.  It was only when Ms Heaton filed her 3^rd affirmation that this was found out.

477.The husband had signed the Consignment Agreements in his own capacity, on behalf of AC Oversea (BVI) and also AC International.   R2’s name did not appear on any of the documents, nor was she asked by Christie’s to be a party to the Consignment Agreements, nor did she sign any of the Consignment Agreements in her personal capacity, or on behalf of any company.  I do not find that R2 held any beneficial interest in the Valuable Timepieces in her personal capacity.

478.As there were 3 names on the Consignment Agreements, I find that the husband was the beneficial owner of at least one third of the Valuable Timepieces covered in the Consignment Agreements plus the collected 9 pieces, in his personal capacity, and the balance was held by the two corporate entities, in equal shares.

479.According to the wife, on the face of all the documents produced by Christie’s, Christie’s had from July 2003 to end of December 2011, advanced more than US$50,877,479 and from the items which were sold, Christie’s had received US$68,801,753[204], and there was surplus of about US$17.9m, or rounded up to US$18m which had been paid over to their client (“Surplus”). The value of the collected 9 items was unknown.

480.From the documents produced by Ms Heaton, it can be seen that there were 6 advances made by Christie’s to 3 bank accounts, including an escrow account held by Mr Seeger’s firm in USA (“Escrow Account”) as follows[205]:

Date	Account	Amount    (USD)
01.08.08	Escrow Account	900,000
21.10.08	Escrow Account	175,000
29.10.08	The husband’s USD Standard Chartered A/C	725,000
12.02.09	Escrow Account	150,000
05.03 .09	AC Oversea (BVI) UBS Stamford Branch	1,300,000
01.07.09	Escrow Account	250,000
	Total : US$	4,400,000

481.The above USD account of the husband’s at the Standard Chartered Bank did not seem to appear on the list of the statements produced by the bank under the subpoena[206], nor was it among those accounts disclosed by the husband.  Anyway, according to Mr Seeger, all advances made into the Escrow Account would be transferred out in accordance with the directions of R2.  In his letter of 4 October 2012, he had said he recalled that in the past decade he had directed Christie’s or funds in his Escrow Account had been wired to R2’s trust accounts “managed by the husband” at the Standard Chartered Bank and the UBS (Singapore). No supporting documentary evidence was produced as to the destinations of those outward transfers made by him.

482.As mentioned earlier, the Surplus was about US$18m and 1/3 of this will be about US$6m, or @7.8, about HK$46.8m, and I find this was the worth of the husband’s 1/3 beneficial interest in the surplus of the Valuable Timepieces.

483.Further, as I have found that the items subject to the Consignment were beneficially owned by the husband, AC Oversea (BVI), and AC International equally, I find that at least 1/3 of the advances made by Christie’s were received by the husband in his personal capacity.  The total advances from July 2003 to end of December 2011 were about US$50,877,479, and 1/3 would be about US$16,959,159, or @7.8, about HK$132,280,000.

N.   TRUST ACCOUNTS 

484.In paragraph 2.3 of the husband’s 1^st Form E[207], he disclosed only 6 banks accounts with the Standard Chartered Bank (“H’s Personal Accounts”).  In his 2^nd Form E, filed about a month before the trial, in paragraph 2.3, he disclosed the same H’s Personal Accounts[208], which he later amended to include a bank account at Wing Hang Bank which he said he held on trust for R2 (“H’s Wing Hang Trust Account”).  He put a total value of his interest in all H’s Personal Accounts to be about HK$93,000.

485.The wife said she had to go through a “herculean effort” and to “fight tooth and nail” just to obtain a subpoena for the banks to disclose the accounts held by the husband.

486.It was only after Poon J dismissed the husband’s application to set aside the subpoena against the various banks that the husband eventually filed his 25^th affirmation on 18 July 2012 disclosing the so called trust accounts at Standard Chartered Bank and UBS (Hong Kong).  The husband’s explanation for not disclosing these accounts earlier was that he did not realize that he was under an obligation to disclose trust accounts as those closed bank accounts with Chartered Bank and UBS were accounts in which he held no beneficial interest and he only held the monies therein in trust for R2. 

487.The trust accounts at Standard Chartered Bank and UBS, according to the husband, were:

Standard Chartered Bank (“H’s SCB Trust Accounts”)
A/C Numbers	Date of Opening		Date of Closing
(only last 3digits)
HKD   997	25.08.95		31.08.09
HKD   999	25.08.95		31.08.09
USD   042	18.11.03		31.08.09
GBP   085 EUR   174	18.11.03 18.11.03		31.08.09 31.08.09
UBS (HK) and UBS (Singapore) (“H’s UBS Trust Accounts”)
UBS (HK)   886 UBS (Singapore)   388

488.The above UBS (Singapore) account appeared to be opened on about 12 January 2006 and since about May 2009, there appeared to be no further transactions in H’s UBS Trust Accounts.  After the wife received various bank statements from the Standard Chartered Bank and UBS (HK), she had raised a further Questionnaire, and in the husband’s Answer[209], the husband then claimed that all of the “trust accounts” were actually operated by Ms Lo.

489.In fact, it was only upon perusing the statements on H’s UBS (HK) Trust Account that  the wife discovered that the husband had held another UBS (Singapore) account, and eventually, the husband produced those statements.  During the trial, the husband then said the deposits into H’s UBS (Singapore) Trust Account were from R2’s UBS (Singapore) account and also the Escrow Account.  As to why R2 would need to open a UBS Singapore Trust Account in the husband’s name, his explanation was that the bank’s practice was that there must be telephone confirmation with the account holder within a prescribed period after each transaction, and this period clashed with R2’s resting time.  R2 then decided to open an account in the name of AC Oversea (BVI), but since this would take time with documents having to be supplied by Mr Seeger, and thus R2 decided to open a trust account in the name of the husband first. I note, however, most of the equity investments in the H’s UBS (Singapore) Trust Account were Hong Kong equities. In any event, I do not find the husband’s explanation convincing.

490.So far as  H’s SCB Trust Accounts  are concerned, again the husband had said those accounts were held on trust for R2, and the funds came from R2 either directly, or from H’s UBS (Singapore) under the instructions of R2, or the UBS bank account of AC Oversea (BVI).  According to the husband, all deposits and withdrawals were done by Ms Lo.  After H’s SCB Trust Accounts were closed on 31 August 2009, there was an account of AC Nominee which was used of which the husband was a signatory. 

491.After closing of all the above trust accounts, 5 new accounts were opened in the personal name of Ms Lo at the Standard Chartered Bank which she stated were held by her on trust for R2[210] (“Lo’s Trust Accounts”).  According to her, the earliest 2 being one for WS (HK) and one for ACE, were opened on 7 January 2011, then one on 7 November 2011 for MVF, and another HKD one on 9 November 2011 for R2, and finally one USD on 30 January 2012 for R2.  All Lo’s Trust Accounts were opened after the wife had issued her 2^nd Proceedings.  According to Ms Lo, the source of funds into Lo’s Trust Accounts came from the UBS (Singapore) account of AC Oversea (BVI) and from the Escrow Account.  Large sums of monies went in and out of these accounts.

492.There were two schedules annexed to the wife’s Closing Submissions, Annexures 6 and 7 showing funds which were deposited into H’s SCB Trust Accounts and H’s UBS Trust Accounts which came from R2 directly:

Total Deposits	Approx Total
H’s SCB Trust Accounts
HKD Current Account (from 20.12.05-26.09.06)	HK$23m
USD Account (from 12.12.05- 04.09.07)	US$3.9m
Total	HK$53.6 m
H’s UBS Trust Accounts (from 18.04.07–02.01.08)	HK$185 m

493.Mr Li, for R2, also submitted Annex K1 to show the deposits.  According to his calculations, from 12 December 2005 to 29 March 2007, the total amount deposited into H’s SCB Trust Accounts was about HK$48m, and the total deposited into H’s UBS Trust Accounts from 12 January 2006 to 8 October 2008 was about HK$182.7m. The total amounts came to about HK$230.7m.

494.Whatever the amounts, they were substantial, as even according to Mr Li’s calculations, the average for the deposits from 12 December 2005 to 8 October 2008 totaling about 34 months appeared to be in the region of HK $6.8 m per month.

495.The wife accepted that the source of the funds into H’s SCB Trust Accounts and H’s UBS Trust Accounts came from R2.  Mr Chow, however, submitted that there was a “presumption of advancement” of the funds from R2 to the husband.

496.I find the funds in the so called trust accounts were jointly used by for the husband’s expenses, R2’s expenses and the expenses of the companies.  In my view, the monies of R2 ad the husband were all intermingled.  I find there was a presumption of advancement of funds in the trust accounts for the husband’s use.  I find that the husband held at least a 50% beneficial interest in the funds which went into all those trust accounts of his or Ms Lo’s and thus he would have benefit of at least $3.4m for the 34 months as aforesaid.  Having said this, the balances in H’s SCB Trust Accounts were withdrawn when the accounts were closed, and the balances in H’s UBS Trust Accounts were reduced to insignificant amounts by May 2009.  Ms Lo’s Trust Accounts were merely used for expenses, and she did not produce full monthly statements.  The balances, so far as I could see, as at October/November 2012 were only about HK$350,000

O.  THE APPLICATION FOR THE MACAU GAMBLING LICENCE, 3 DIAMOND RINGS AND THE JEWELLERY COLLECTION

497.These issues can be conveniently considered together.  In connection with these issues was a report dated 3 January 2002 from the accountants Deloitte’s produced by the wife[211] (“Deloitte’s Report”).

498.The wife’s case was that the husband had asked her to make an application for a gambling licence in Macau, as he was unable to do so due to the fact that he was already the holder of shares in the Macau Corporation through his shareholder in MVI (Panama).  The husband then asked the wife to be the front for him in her application, and in this connection, the Deloitte’s Report was prepared.  Subsequently, according to the wife, a copy of the Deloitte’s Report was also sent to the authorities in Beijing in connection with the Car Museum Project in Beijing.

499.The Deloitte’s Report purported to be an “asset proof” for the application/project. The wife relied on it as evidence of the husband’s financial situation at that time.

500.The husband’s case was that there were 2 separate applications for a gambling licence in Macau made in about 2001:

(i)   He assisted R2 in making an application for a gambling licence in Macau in the name of MVI (Panama) which was later withdrawn in December 2001[212], and this application had nothing to do with the Deloitte Report;

(ii)   A separate application was made by the wife herself, with her own partners and that this had nothing to do with the husband or R2. The Deloitte Report which the wife had said she commissioned was made to support her application which had nothing to do with the husband, save and except that he did attend a few meetings in relation to her application, only to throw out ideas and suggestions.

501.The application in (ii) was made in the name of AC Casino Resort.  According to the wife, she was the owner of that company which was worth HK$500,000[213], but it seems that a company which I have referred to earlier AC International Travel & Amusement was also a shareholder.  The wife’s application eventually failed.

502.So far as the Deloitte’s Report is concerned, in Schedule H thereof[214], according to what was listed therein, the husband’s shareholding in the following companies were:

AC Oversea (BVI)	100%
WS (not clear whether Deloitte’s referred to the BVIcompany or the Hong Kong company)	100%
ACE	100%

and 50% in MV (Panama).  The total market value of the husband’s shareholding in the 4 companies was stated to be HK$4,110,000,000 as at 6 December 2011.

503.It was, however, quite clear from the Deloitte’s Report that so far as the companies were concerned, the list came from the wife, and no company searches or registers of members had been made available to Deloitte’s.  Thus, there was no independent verification done by Deloitte’s.

504.Included in the assets were “Jewellery” listed as 100% owned by the wife and to be worth HK$168,000,000 as at 6 December 2011.  The date and cost of acquisition was not provided, but apparently there was an independent valuation report obtained by Deloitte’s, but which report had gone missing.   The wife had said in her affirmation that she was told by the husband to declare assets including properties and jewellery etc belonging to R2 and Rs’ companies, as belonging to her in her application[215].

505.The husband, on the other hand, said neither he nor R2 owned jewellery valued to be HK$168m in 2001.  As the valuation report was missing, the items included in the HK$168m were not known. 

506.In particular, it was not clear whether 3 diamond rings were included in the valuation report. The husband said that the 3 rings were never valued by any professional surveyor/valuer for the purpose of the Deloitte’s Report.  At present, the beneficial ownership of the 3 diamond rings is subject to an action in the High Court in Hong Kong instigated by R2 against the wife[216], and I understand 2 of the rings had already been returned to R2 by the wife, and the remaining one was held jointly by the solicitors.

507.The wife’s case in relation to the Deloitte’s Report seemed to be what she put down as  assets held by “self” were actually R2’s assets, or assets beneficially owned by R2, whereas what she put down as assets held by “spouse” were beneficially owned by the husband.

508.There was  no independent verification by Deloitte’s as to the beneficial ownership of the various assets mentioned in the Deloitte’s Report, save for land search of  properties in Hong Kong, and a missing valuation report of the “Jewellery”. The report was prepared based on information supplied by the wife, and was prepared over 10 years ago.  In the circumstances, I do not find the Deloitte’s Report as having contained independent evidence of the alleged ownership of the assets stated therein.

509.There were various other issues arising out of the wife’s application for the gambling licence, which were relied on by both spouses to show the other was not a credible witness.

510.The wife had called 3 witnesses - Mr Leung, who was at the time a director of AC Casino Resort, Mr Ho who drafted the proposal for the application, and her friend Lily, to support her case that it was the husband who was behind her application and that she was only used as a “front” person.  Mr Leung used to work as a conveyancing clerk for CK Mok & Co before 1993 and his ex-wife was a distant relative of the wife’s.  It was clear from Mr Leung’s testimony that it was both spouses who invited him to become a director of AC Casino Resort, although he said it was not a formal invitation.  He had further said that he had gone to Macau with meetings which would be attended by the spouses, Mr CK Mok, Mr Lai, and Dr Alves.

511.Mr Ho had been in the field for producing television/video/promation material etc since about 1980 and in about October 2001, he recalled both the husband and the wife approached him and asked him to draft and design a proposal for application of a gambling licence, and the brochure he prepared on 7 December 2001 was exhibited in his affirmation[217]. He was not able to recall how many formal meetings he and the husband had, but said they met a few times but sometimes they chatted about other things.

512.Lily originated from Hong Kong but went to San Francisco to study and had lived there since.  Lily was the one from whom the wife had been borrowing various sums since 2009.  Anyway, it was Lily’s evidence that in about November 2001 she was asked by the husband to introduce to him business partners in the USA in connection with the gambling licence.  When shown a letter from AC International Foundation for Culture Studies appointing her to assist in this regard[218], she had said she was not sure whether she had seen that letter. Notwithstanding this, I find that her evidence tied in with that of Mr Leung’s and Mr Ho’s, in that the evidence of all three had indicated the husband’s involvement was not merely only a supporting husband throwing out ideas and suggestions.

513.On the other hand, the husband had called Mr Lai to testify on his behalf.  Mr Lai had said that according to his understanding the application for a gambling licence was the wife’s application and she would go and seek financial support outside.

514.Having considered the evidence, in 2001, the relationship between the spouses was by all accounts a good one and I do not find it possible that the husband was only involved in the wife’s application to the limited extent as alleged by him.  I further do not believe the wife could have made such an application on her own without the support, financial and/or otherwise, of the husband.  I find that the husband was indeed the person behind the wife’s application.

P.   HK $1 M GIFT/ADVANCE

515.The wife said in 2005 the husband was given a cheque of HK$110m as dividends by the Macau Corporation, and that he gave the wife HK$1m as gift.  To be exact, the amount should be about HK$112.8m.

516.As pointed out by the husband, the cheque was made out to R2, and the husband produced a copy of this cheque which was dated 22 July 2005[219] (“Dividends Cheque”).  Further, the cheque of HK$1m to the wife was from MVF, and the husband had also produced a copy of this cheque which was dated 25 July 2006[220].  As with many issues, the husband had come up with an elaborate explanation.  The reason for this payment to the wife was that R2 had planned to give HK$3m to each member of MVF for his/her services upon MVF becoming a registered shareholder of the Macau Corporation, and that should MVF receive dividends (“HK$3m Plan”). Members could draw an advance up to HK$3m, and that HK$1m to the wife was an advance, and that other members were also given such advances.

517.The husband’s case seemed to be inconsistent.  In his 2^nd affirmation, he had said this HK$1m was an “ex-gratia payment” for her services provided, and this he repeated in his 4^th affirmation[221]. It seemed to be only in his 22^nd affirmation that he mentioned the HK$3m Plan, and the advance, and it seemed that his case was that the wife would have to repay this HK$1m if MVF failed to become a registered shareholder of the Macau Corporation or that no dividends were ever received.

518.Further, the husband said he had also received his HK$3m by instalments.

519.The husband had also asked Mr Lai to testify on this issue. Mr Lai became a member of the executive committee of MVF in 2009, after the resignation of the wife, although prior thereto, he had been a founding member and secretary. Mr Lai had made 3 affirmations on behalf of the husband[222]. Mr Lai was also a 2.5% shareholder of AC International Travel & Amusement.

520.According to Mr Lai, R2’s decision for the HK$3m Plan was made before her execution of the Deed of Gift dated 27 June 2005, under which she gave 6,000 of her shares in the Macau Corporation to MVF.  He then said that he had also been given advances by MVF, by several instalments totaling HK$2m as follows;

1st - Oct/end of 2005	HK$600,000
2nd - 2009	HK$1m
3rd - 2011	HK$500,000

521.Mr Lai had produced copy of a cheque from MVF dated 26 November 2009, for the 2^nd advance[223].  He said Mr CK Mok had also received one for HK$1m at the same time.  Mr Lai had also produced a copy of the cheque dated 18 November 2011 for the 3^rd advance of HK$500,000[224].  He confirmed that Mr CK Mok also received one.  His evidence was that there were no discussions among the executive members before the payments, and that he was not informed beforehand.  He also confirmed that he did not sign any promissory notes for these advances.  He did not produce the cheque or other evidence of his receipt of the first HK$600,000.

522.Mr Lai had produced a copy of the minutes of an EGM of MVF dated 8 February 2011 signed by R2, the husband as Chairman, Mr CK Mok, Mr Lai himself, and Ms Lo[225], which stated it was resolved “with the absence vote of the Chairman”, that MVF approved to grant an advance payment by way of loan nature without interest thereon to the Chairman from time to time up to HK$3m.  This was stated to be:

“(i) In consideration of MVF was at the date hereinbefore agreeing to effect a payment for HK$3m as gratuities to the Chairman for his act and/or service rendered in Macau in relation to the Macau Corporation shares with condition…

(ii) In consideration of the Chairman is the founder of MVF and in view of his present financial difficulties that he is short of cash fund and is unable in to make legal fees to his lawyers in respect of his divorce case and those monthly payments to his ex-wife and children as in compliance of the Order of the court…

523.Mr Lai had set out in his 2^nd affirmation the 8 payments being so called advances to the husband, for whom the husband had signed promissory notes to MVF[226]. However, the total amount exceeded the sum of HK$3m by HK$1,300, which Mr Lai then claimed it was a clerical error by Ms Lo, and that the husband had repaid the said HK$1,300 to MVF,

524.Ms Lo had testified that Dr Alves had also received a cheque dated 8 August 2005 of HK$1m from MVF, which was paid to him under the HK$3m Plan, but she then went on to say R2’s idea was in future when dividends received from the Macau Corporation, each member would be given HK$3m, as at that time, dividends had not been received, R2 paid to members out of her own pocket the sum of HK$1 m.  Ms Lo had produced a copy of the cheque to Dr Alves[227]. The cheque was signed by the husband on behalf of MVF.  I find Ms Lo’s evidence rather confusing, in that at that time R2 had already given/donated her 6,000 shares in the Macau Corporation to MVF under the Deed of Gift, and further, R2 had already received the Dividends Cheque.

525.When the wife received the sum of HK$1m, she was not asked to sign any promissory note, nor any receipt indicating that it was an advance, being part of the HK$3m Plan. The Minute of 8 February 2011 of MVF was signed after the wife had issued her 2^nd Proceedings and drafted in such a way so as to provide evidence of the HK$3m Plan by R2.  Had there been such a plan in place in 2006, there seemed no reason why the wife, or indeed both spouses and other members,  could  not have each received HK$3m as advances at that time,  as R2 had already received the Dividends Cheque about a year ago.  Furthermore, during the EGM of MVF on 18 November 2009[228] at which the wife, the husband, Mr CK Mok, Ms So and Mr Lai were all present, and by then the relationship between the spouses had obviously broken down, and the wife had presented her letter of resignation, there was no mention of the “advance” to the wife of the said HK$1m being part of the HK$3m Plan.

526.The resolution mentioned by Mr Lai in his affirmation was the one dated 8 February 2011.  So far I can see there were no contemporaneous minutes signed by the members in 2005/2006 recording R2’s HK$3m Plan and the advance when the Dividends Cheque was received by R2, or when the HK$1m was received by the wife.  There were no minutes in relation to the payments to Dr Alves, Mr Lai or Mr Mok.  I do therefore not accept that part of Mr Lai’s evidence in relation to the said HK$1m received by the wife, namely that it was an advance under the HK$3m Plan or that there was any requirement for repayment of the HK$1m in the event of the registration of MVF as a shareholder should fail.

527.The wife’s case was that the husband gave her the sum of HK$1m as a gift.  As the cheque to her was from MVF, having considered the evidence, I find it was an ex-gratia payment to the wife by MVF, as stated by the husband in his own initial affirmations. I do not find there was any obligation on the part of the wife to repay this sum to MVF, whether now or in future.  Mrs Remedios had submitted that this sum should count towards the wife’s asset, which I accept.

Q.   THE BEIJING LITIGATION

528.I have made my findings on the beneficial ownership of the relevant Beijing Group of companies earlier.  The husband seemed to be of the view, as reflected in a letter of 10 October 2012 from his solicitors to the wife’s solicitors, that the wife was under a liability to repay to AC Beijing a sum of HK$4,465,700 being remittances from BH Enterprises Ltd to AC Beijing[229]. It was not clear as to how this amount was recorded in the books of AC Beijing, but in any event, I was under the impression that AC Beijing was a limited liability company.  If this were indeed the case, then the wife should not be under any personal liability to repay to BH Enterprises Ltd.

529.As I have indicated earlier, I will leave the Beijing Courts to continue to deal with the litigations there.

R.  THE HUSBAND’S INCOME, EARNING CAPACITY, PROPERTY AND/OR FINANCIAL RESOURCES

Income and Earning Capacity

530.As mentioned in the background of this judgment, the husband holds a Bachelor Degree in Business Administration and a Master Degree in International Management.  He had worked in real estate in the United States, and thereafter he was involved in Trading Activities.

531.What is clear is that throughout the marriage, until 2009 when the spouses’ relationship deteriorated, the husband was never in any gainful employment, in other words, he did not have a job, nor did he need to have a job.  He claimed to have provided “freelance” accounting service to ACE and WS (HK) in his 1^st Form E for which he claimed to receive HK$10,000 per month.  It is not clear what accounting service he was referring.

532.Then, suddenly, he produced an employment agreement and claimed that he was appointed a “marketing consultant” at AC Oversea (BVI) in July 2009.

533.His explanation about this appointment was that in July 2009, he was given a formal title in the capacity of a “marketing consultant” at AC Oversea (BVI) with a salary of US$10,000 per month and average bonus of US$3,000 per month.  When cross examined as to what his duties were in this post, his reply was ‘basically nothing’, as he said he was given this title only because R2 wanted to ‘make everything proper’. He then went on to explain that since ACE had paid all his credit cards and children’s expenses, and as R2 wanted to donate all her assets after she passed away, he was given a post  at AC Oversea (BVI) so that he could have a salary. As for the “expected” bonus, the husband then said R2 told him that it would be about HK$300,000 a year if he worked to a satisfactory standard, and that there was an implied and mutual understanding between him and R2 that this HK$300,000 a year would be used as charity purposes.   He then claimed to leave this alleged post in March/April 2010.

534.The husband’s post as “marketing consultant” of AC Oversea (BVI) was not disclosed in his 1^st Form E.  He claimed it was an oversight on the part of both him and his lawyer.  I reject what the husband had said.  I find that his post and salary were created for some purposes to attempt to explain why his personal expenses were continued to be paid by ACE, or AC Oversea (BVI), if he held no beneficial ownership in these companies.

535.Anyway, this post did not last long.  The husband said he later on resigned and started to look for a job.  He said he even tried to seek assistance from Mr Seeger to see if he could work in Mr Seeger’s company in the United States.  He then claimed he was offered a job to work as “project director “of MVF in August 2011 so that he could continue to help to handle the litigations concerning MVF and Mr Lai produced a minute of a meeting of MVF in support of this[230]. He claimed his monthly salary as “project director” was HK$65,000 as from 1 September 2011[231]. According to Mr Lai, it was R2’s idea to give a job to the husband and to provide him with a salary.

536.Then shortly before he was to file his 2^nd Form E, about a month before the trial,  he claimed he was advised not to work after consulting a psychologist Dr Pon, and he therefore resigned from the post of “project director” as from 1 October 2012, 10 days before the commencement of the trial.

537.Dr Pon’s letter did not state that the husband was unable to work, and only suggested that the husband would need professional assistance. 

538.It is quite clear that the posts “marketing consultant” or “project director” were simply created to give the husband some sort of title.  There was no real work involved.  If the husband could receive HK$65,000 to HK$78,000 a month for simply holding one of these titles, I find that he should be able to earn a great deal more if he did some real work.  In any event, I do not find that there was sufficient evidence to show that the husband was unable to work by reason of any psychological problems.

539.The XXX Judgment had shown that the husband was already an experienced trader in Trading Activities in the early 1990s.  I find that he will be able to continue to trade, if he has not already been doing so, and that this will be a source of income for him.

540.The YYY Judgment showed the husband was a businessman and to certain extent was a trader in antique and new timepieces.  I find that he has the ability to continue to so trade, if he has not already been doing so, and that this will also be a source of income for him.

541.Further, it was the wife’s case that the husband had spent millions in maintaining a classic car business in England through a company GKCC Ltd. According to Mr Seeger, GKCC Ltd was wholly owned by AC Oversea (BVI) and was a trading company in automobiles and had a number of automobiles.  Mr Seeger claimed to manage this business.  One could see from the statements of H’s SCB Trust Accounts that there were various remittances, and according to Mr Seeger, these were to cover various expenses such as rent, insurance, wages for custodian employees and mechanics, telephone and faxes.  There had been no disclosure by the husband of this business.  Further, according to Mr Seeger, AC Oversea (BVI) had some referral business, or as the husband himself put it, some agency jobs as middleman to auctioneers.  Although Mr Seeger had said these referral businesses were insignificant, as I have found that the husband was/is at least a 50% beneficial owner of AC Oversea (BVI), no doubt he will also receive income from all these businesses including GKCC Ltd.

Property and/or Financial Resources

542.To summarise, I have set aside the dispositions made by the husband of his shares in the AC Group  of Companies, and in WS (HK), and have found  he was/is the beneficial owner of such shares registered in his name.  I have found that the husband held/holds 1/3 beneficial interest in the Valuable Timepieces in his personal name.  I have also found that he now holds at least a 50% beneficial interest in the 3 Offshore Companies, namely AC Oversea (BVI), WS (BVI), and SBI (Bahamas) and in Ms Lo’s Trust Account. 

543.In accordance with my findings, the approximate value of the husband’s beneficial interest in various companies, the cars, the Valuable Timepieces, Ms Lo’s Trust Accounts, would be:

The husband’s beneficial interest	Approximate Net Asset Value
3 out of 1,000 share in WS (HK) 0.003 x HK$248.8m (landed properties)	HK$746,400
2 out of 10,000 shares in ACE 0.0002 of HK$98.8m (landed Properties)	HK$19,760
2 out of 10,000 shares in AC International which held 1/3 interest In Surplus of the Valuable Timepieces (0.0002 x HK$46.8m)	HK$9,360
1 out of 2 shares in AC Oversea Nominee (0.5 x $2,170,965, being alleged loan amount due from the husband)	HK$1,085,482.50
1/3 interest in the Surplus of theValuable TimepiecesUS$6m/HK$46.8m	HK$46,800,000
Through 50% beneficial interest in SBI (Bahamas): 1 out of 1,000 shares in WS (HK)    x HK$248.8m x 50%	HK$124,400
Through 50% beneficial interest in AC Oversea (BVI): Assets of AC Oversea (BVI) comprising of the following : 9,998 out of 10,000 shares in ACE (0.9998xHK$98.8m= HK$98.78m)	HK$137,133,000 ($274,266,000 x 0.5)
9,997out of 10,000 shares in AC International, which held 1/3 interest in the Surplus of theValuable Timepieces (0.9997 x HK$ 46.8m =HK$46.786m)
1/3 interest in the Surplus of theValuable Timepieces (HK$46.8m )
Collection of Cars (at least HK$78m in 2004) Alleged loan amount due from the husband (US$250,000/HK$1,950,000) Alleged loan amount due from MEBH Foundation (US$250,000/HK$1,950,000)
Through 50% beneficial interest in WS (BVI): Assets of WS (BVI) comprising of: 994 out of 1,000 shares inWS(HK) (0.994 x HK$248.8m =HK$247,307,200)	HK$123,653,600 + ($247,307,200 x 0.5)
+ 1000 out of 10,000 shares in MVI(HK), the shareholder of MVI(Panama) holding 251shares in Macau Corporation and 45,050 shares in ST Shipping	unknown
Through being a member of MVF holding 6,000 shares in the Macau Corporation + alleged loan to the husband of HK$16.92m	unknown
50% of Lo’s Trust Accounts (HK$350,000 x 50%)	HK$175,000
Total about	HK$309,750,000 +

544.According to the husband’s 2^nd Form E, he disclosed the following personal assets:

	Approximate Amount
Balance in H’s Personal  Accounts Monies owed to the husband	HK$93,000
By R5 under order of US court (the husband claimed during trial such sums would be offset by his legal fees owed to Akin Gump of US $ 885,000[232])	HK$5,436,600
Valuable personal items, including a men size ruby ring allegedly in the wife’s possession	HK$1,100,000
Trust Remainder and Cash Investment, said to be subject to change by Settlor R2 from time to time	nil, only to bematerialized upon AM, Who is now 54
MPF(realizable in 2024)	HK$ 17,009
Total :	HK$5,646,666

545.The husband had claimed various liabilities in his 2^nd Form E, filed in September 2012, and in view of the trial, further costs were incurred after the filing of his 2^nd Form E, and he claimed more loans had been taken from MVF.  The total amount as of November 2012 was HK$36, 354,590.70.  As at his 2^nd Form E, his liabilities were HK$28,958,415:

AC Oversea (BVI)
US$250,000 for Thai divorce	HK$1,950,000
US$250,000 to Georgetown University	HK $1,950,000
AC Oversea Nominee	HK$2,170,965
MVF	HK$9,527,064
CK Mok	HK$1,580,000
Mr Lai	HK$490,000
Ms Lo, at trial amended to	HK$1,030,000
CWP, at trial amended to	HK$870,000
US lawyers fees	HK$9,360,000
Hang Seng credit card	HK$30,386

546.In the husband’s 1^st Form E (April 2010), he only disclosed liabilities of HK$3,669,656.20[233], including HK$1,950,000 to AC Oversea (BVI), HK$773,545 to AC Oversea Nominee and HK$946,111 to ACE.

547.Thus in the 2½ year period between the two Form Es, the husband’s alleged liabilities had multiplied about 10 times.

548.So far as the US lawyers’ fees are concerned, these were in connection with his litigation against his father R5.  According to a letter from his lawyers Akin Gump of 16 November 2012 produced by the husband during the trial, the then outstanding fees as at 31 October 2012 were only US $885,095.52[234]. The amounts which R5 had to pay him under the US Court order were a total of US$697,000.  Thus, any amount payable by him should only be US$188,095.52, or approximately HK$1,467,000.

549.There was only one loan of amount US$250,000 from AC Oversea (BVI) mentioned in the husband’s 1^st Form E.  I do not find there was sufficient documentary evidence to support the husband’s Thai divorce cost of US$250,000.  The total rental for the lease of the apartment in Bangkok for one year, so far as I could see, was a total of 180,000 Baht (15,000 Baht a month).  Also, I have already found that the loan of US$250,000 for the donation to Georgetown University should not be repayable by the husband but by MEBH Foundation.

550.The husband had produced a bundle of promissory notes as evidence of his alleged loans to the companies and various persons.  The loan from MVF went up because of the legal costs of the trial

551.Even assuming there was one loan of US$250,000/HK$1,950,000 from AC Oversea (BVI), one loan of about HK$2,150,965 from AC Oversea Nominee, and approximately loans of around HK$16.92m from MVF, including about HK$7.4m[235] since September 2012, the total loans from these companies came to about HK$21m.  The other loans from various persons and credit cards came to approximately HK$4m.  The net amount due to his US Lawyers was HK$1,467,000.  All these alleged loans of the husband’s would total about HK$26,467,000, say HK$26.5m.

552.In my view, most of the above were created to try and explain how his legal and/or other personal expenses were being funded after the wife issued the 1^st Proceedings.  In view of my findings on his assets and/or financial resources, I find there was no sufficient evidence that the husband actually was in need of any of those alleged loans or he needs to repay to the companies.

553.However, even assuming he did have a liability to repay loans of about HK$26.5m, I find his net assets should still be at least HK$280 m, as follows:

His beneficial interest in various companies
+ Valuable Timepieces + Lo’s Trust Accounts Balance disclosed in his bank	HK$309,750,000
Accounts in his 2nd Form E	HK$93,058
Personal items	HK$1,100,000
MPF	HK$17,009
Total	$310,960,067
Less so called liabilities	$26,500,000
Net, approximately	$284,460,000

Other Financial Resources

554.The total advances made by Christie’s over a period of about 8½ years (102 months), from July 2003 to end of December 2011, was more than US$50,877,479.  I have found the husband received 1/3 of this namely US$16,959,159, and @7.8 would be about HK$132,281,445. Such advances would be almost HK$1.3m a month.

555.I have also found that the total amounts deposited into H’s Trust Accounts by R2 averaged about HK$6.8m a month for 34 months from December 2005 to October 2008, and I have found that he had 50% beneficial interest in the Trust Accounts.  His share would be about HK$3.4m a month.

556.I find all the above were all his financial resources in the past.  The total financial resources from his 1/3 interest in the Surplus and H’s Trust Accounts totaled about $4.7m a month.  R2 is now 89 years of age and she is in ill health.  The husband said he believed that R2 made a will but he claimed he had not seen it and did not know how R2 would dispose of her estate.  Further he said during cross examination that between the setting up of MVF and November 2009 when the wife issued her 1^st Proceedings, R2 did mention about distribution of her estate and the understanding the husband had was he would receive less than WM and AM, as R2 believed that the husband and BM would receive something from R5.   The husband then said that R2 had mentioned again distribution of her estate a few months before the trial and that according to him, everything would be donated by R2 to charity through a new foundation set up in her name earlier in 2012 and that her assets would be divided equally.  I find that the husband was being deliberately vague and evasive as to what he would receive in future from R2’s estate.

557.In any event, it is my finding that it is highly likely that the husband will continue to receive in the forseeable future the financial resources he had been receiving in the past.

558.To conclude, I find that the husband has substantial assets and substantial financial resources to meet the orders I shall be making.

S.   THE WIFE’S INCOME, EARNING CAPACITY, PROPERTY AND/OR FINANCIAL RESOURSES

Income and Earning Capacity

559.The wife had not been in any gainful employment since the marriage.  She has only been involved in non profitable/charitable work.  I accept what she had said, that during the marriage, she and the children were entirely dependant on the husband.

560.The husband had made some allegations as to the wife having a secret business in Mainland China, by using AC Beijing “for her own commercial purpose”.  I do not find that there was sufficient evidence of the wife using AC Beijing for any secret business.   The husband had also alleged that there were other businesses.  Although there seemed to be some projects/business opportunities mentioned by Mr Grover to the wife, and other projects from documents produced by Ms Yau, I am satisfied that these were merely talks and there was no sufficient evidence that any of these projects/businesses actually took off.

561.The wife had also set up a foundation in her own name, namely KC Foundation, and she claimed that she would continue with her donations and charitable work.  According to her, she had personally donated HK$50,000 out of monies provided to her by the husband.

562.Although the wife has not received as high an education as the husband, she is a clever woman, and she seemed to have generated a lot of contacts in Mainland China.  I find that she has the ability to work or to engage in a business, and she accepted this.  According to her, she last earned HK$1m a year in 1989, which was denied by the husband who said she was only making HK$100,000 to HK$200,000 a year.  I have found no sufficient evidence to support what she said.  In any event, that was in the entertainment field 24 years ago.  I find her future earning capacity is unknown.

Property and/or Financial Resources

563.The wife in her 2^nd Form E stated that she owned or had 50% beneficial interest in the matrimonial homes of Grand Panorama Flat and the Estoril Court Flats. She then stated that she owned or had 50% beneficial interest in the Hunghom Offices and an apartment on Kennedy Road (“Kennedy Flat”), and further properties, if any, pending discovery. She further stated that she held a flat in Guangzhou (“Guangzhou Flat”) in trust for Madam Lai, which she did not disclose in her 1^st Form E.

564.As the registered owner of the Grand Panorama Flat and the Hunghom Offices was ACE and the registered owner of the Estoril Court Flats and the Kennedy Road Flat was WS (HK), I assume what the wife meant was she owned 50% of the husband’s beneficial interest in these companies.  It was not denied that Madam Lai had paid HK$300,000 for the downpayment for the Grand Panorama Flat, and it was the wife’s case that this amount had never been repaid by the husband or ACE.  The husband on the other hand said it had been “repaid” by giving Madam Lai a film editing machine from AC International, which was denied by the wife.  So far, there had been no evidence from Madam Lai herself as to whether the said HK$300,000 was a loan, and if so, to whom, and whether there had been any repayment.  I note that this amount was paid over 20 years ago, and there had not been any legal action taken by Madam Lai to recover the same.  I will leave this matter to Madam Lai to deal with.

565.So far as WS (HK) is concerned, I have found that the wife held/holds the beneficial interest in the one share registered in her name, out of the issued 1,000 shares, and the value of this would be 0.1% of HK$248.8m, or HK$248,800. I have found that her share in ACE was held in trust for the husband, and so was Madam Lai’s.  As for AC International, she held 1 out of 10,000 shares, and the net asset value of this would be only HK$4,680 (0.0001 x HK$46.8m, being 1/3 of the  Surplus of the Valuable Timepieces ).  The value of her shareholding in the other AC Group of companies, as with the value of the husband’s shareholding in those companies, were unknown.

566.The wife admitted that she had received HK$3m from the husband at the time of their marriage.  The wife’s case was that she had given all of the HK$3m to her parents because she wanted to show gratitude to her parents.  Mrs Remedios submitted that this amount should be taken into account, and I agree.  The agreed expert has stated today’s value for this sum is about HK$8.4m[236], and I so find.

567.As mentioned earlier, R2 instituted an action against the wife over the diamond rings which had been in the wife’s possession.  The wife’s case was one of the 3 rings, namely a 10 carat marquise diamond ring had been given to her by R2 as a gift.  This ring was apparently worth about HK$10m[237]. The beneficial ownership of this ring has not been determined at this stage, same as the beneficial ownership in the 6,251 shares in the Macau Corporation and 45,050 shares in ST Shipping.

568.As to her other jewellery, the wife had said they were left at the Estoril Court Flats or the HSBC safe deposit boxes held in ACE’s name.  I do not find that there was sufficient evidence as to the value of the jewellery left in the safe deposit boxes.

569.She stated in her 2^nd Form E that she had the following assets were:

Property in Guangzhou, in joint names of the wife and Madam Lai, and allegedly held by the wife in trust for Madam LaiBalance in bank accounts	HK$17,850
Monies owed to her by the husband	HK$5,554,000
The marquise diamond ring	unknown
Jewellery	unknown
by the husband	unknown
Hong Kong Jockey Club membershipPaid by a company MTD, the sole owner of whichthe wife claimed  Madam Lai’s	HK$300,000

570.Although the wife put a value of HK$300,000 to her Jockey Club membership, I do not think this membership is transferrable/saleable.

571.There were in fact two properties in Guangzhou which were held in the joint names of the wife and Madam Lai, one of which was sold on 26 September 2010, after her 1^st Form E, for RMB1,700,000.  The wife’s case was that she held/holds her share in these properties in trust for Madam Lai.  There was no evidence from Madam Lai, and I do not find there was sufficient evidence that the wife held her share in the two properties in trust for Madam Lai.  I thus find that the wife held 50% beneficial interest in these two Guangzhou properties, which should have been disclosed by her in her 1^st Form E.  The total value for these properties were RMB3,900,000, and 50% would be RMB1,950,000, or @1.25, about HK$2,437,500.

572.So far as MTD Ltd is concerned, it had two cars, a Mercedes Benz S500L and a Toyota van, and it seems that the wife and the children were using those cars, and was paying for the monthly instalment of the Benz.  The wife’s rental and utilities were being paid by MTD Ltd, so were her credit card bills.  Further, the wife claimed that she owed MTD Ltd HK$300,000 for the Hong Kong Jockey Club membership fee. It was not clear why other expenses paid by MTD Ltd on the wife’s behalf was not regarded as loans in her Form E whereas this amount of HK$300,000 was.  There was no evidence from Madam Lai as to the source of funds of MTD Ltd, as this company had no business.  I do not find that there was sufficient evidence of HK$300,000 being a loan.

573.The wife claimed that she had liabilities of about HK$3.7m at the time of her 2^nd Form E.  The outstanding Hang Seng Bank loan of HK$495,210 as at 10 September 2012 should be repaid in April 2013.  The outstanding credit card amounts were about HK$554,500.  Thus at the trial, the total outstanding amounts were about HK$1m.

574.There were two loans, one of HK$400,000 from a friend surnamed Ma and HK$2m from Lily.

575.So far as the loan from Lily, the HK$2m was paid to the wife by various amounts between July 2009 to February 2012, mostly in RMB and paid to the wife in Beijing, except for two amounts paid in Hong Kong.  The wife had produced a Loan Deed entered into between her and Lily, and it appeared that the total amount lent was about RMB1.2m and HK$600,000, with RMB200,000 having repaid by the wife in about September/October 2009.  The total amount now outstanding appeared to be about HK$11m, with RMB1 @HKD1.25.

576.All the amounts paid to the wife were in cash.  As there is exchange control in Mainland China, it is not clear how all those cash amounts were taken out by the wife from Beijing.  Further, according to Lily, the wife had repaid her RMB200,000 in September/October 2009, and yet, as pointed out by Mrs Remedios,  the wife was supposedly short of funds at that time .   Having considered the evidence, I am not satisfied that these payments were indeed all loans.

577.As for the HK$400,000 loan from Ma, according to the wife, the first amount of HK$200,000 was borrowed in about November/December 2009, and then two or three months later, she borrowed from Ma another HK$200,000.  These were for her legal costs and to maintain herself, her mother and the children.  These amounts were again in cash.  I do not find there was sufficient evidence to support this loan.  Having said this, the wife said she owed legal costs in the millions.  The amount was said to be about HK$20m from her Estimate of Costs as at 31 January 2013, and no receipts for any paid legal fees had been produced.  The wife had said some of the funds withdrawn from her bank accounts were for payment of her legal costs.  Anyway, the total amounts paid, and the exact amount of outstanding legal costs was unknown.

578.I accept what Mrs Remedios submitted, that the wife herself had also failed to make full and frank disclosure of her finances, but I find her lack of financial disclosure paled against the husband’s.

579.To summarise, I find the wife’s net assets were in the region of at least HK$11m, as follows:

1 share in WS (HK)	HK$248,800
1 share in AC International	HK$4,680
HK$3m, at today’s value	HK$8,400,000
HK$1m received in 2006	HK$1,000,000
50% beneficial interest in the 2 Guangzhou properties	HK$2,437,500
Cash at bank	HK$17,850
Jewellery	unknown
Total	HK$12,108,830
Less liabilities	HK$1,000,000
Bank and Credit Card  HK$1m
Legal costs	unknown
Net approximately	HK$11,000,000

T.   THE FINANCIAL NEEDS OF THE HUSBAND

580.The husband’s case was that the family had lived a frugal life. The wife, however, said the husband had spent massive amounts on himself.  Apart from his expensive hobbies of collecting cars and timepieces, the wife said the husband spent considerable sums on clothes and had more than a room full at the Estoril Court Flats.  Her witness Lily had also testified that the husband had spent more than HK$700,000 on brand new design suits left in the Beijing office unworn in 2009[238]. The husband said what Lily had said was incredible.  Lily’s evidence was to certain extent supported by Madam Yu’s evidence, although Ms Yau denied that she had ever received from Madam Yu or staff of  AC Beijing any alleged pictures of  the husband’s clothes.  

581.I do not think Lily and Madam Yu could have both made up all what they had said about the husband’s clothes, and I accept that the husband did buy many clothes which were kept at the Beijing Office, although I find that there was no sufficient evidence to say the clothes kept at the Beijing Office cost $700,000.

582.So far as the husband’s credit card spending is concerned, it seems according to the wife’s calculations, the highest was in 2006 when on average, the husband’s spending was about HK$85,400 per month, then for 2007, it was about HK$67,550 per month, for 2008, it was only about HK$17,000 per month.  Then for 2009, it was HK$28,380 per month, and from 2010 to 2012, it was even lower.  

583.The husband had said that he had used his credit cards to make purchases on behalf of R2 and/or R2’s companies, as gifts to others. Mrs Remedios had submitted that after deducting such purchases, the husband’s average monthly credit card expenditure from 2006 to 2012 should only be about HK$19,000 per month.

584.So far as gifts for companies were concerned, these should be expenses of the companies.  The husband had provided no sufficient evidence that he had been re-imbursed by R2 or by the companies.  I have found that the husband had/has beneficial interest in the relevant companies.

585.According to his 2nd Form E, the husband’s monthly expenses were:

General
including the alleged rental forGrand Panorama Flat + Tung Choi Flat	HK$51,000
Personal
including HK$40,000 interim maintenance   and HK$400,000 for legal expenses	HK$452,206
Children	HK$53,838.67

586.The so called rental expenses for the Grand Panorama Flat only became payable after the 1^st Proceedings had been instituted.  I have found that there was no sufficient evidence that he moved to the Tung Choi Flat.  If one leaves aside the rental expenses, the interim maintenance, the children’s expenses, the husband’s financial needs according to him would only be HK$12,200 per month. In Mrs Remedios’s Closing Submissions, the husband’s total expenditure from March 2010 to November 2011 were said to be about HK$11.6m, and yet none of the items listed for this amount were for his own financial needs[239]. I find the amounts stated by him for his financial needs in the sum of HK$12,200 per month, or a total of about HK$31,000 including his credit card expenses of about HK$19,000 per month to be a gross understatement.  I shall assume his financial needs will be similar to that of the wife’s.

U.   THE FINANCIAL NEEDS OF THE WIFE AND THE CHILDREN

587.The wife’s case was that since their marriage and she and the children had enjoyed a very high standard of living during the marriage.

588.In particular, it was the wife’s case that she and Madam Lai were the principal card holder of a number of credit cards, and all their credit card expenses were paid by the husband.  Further they and the children had the use of two drivers in Hong Kong, and the driver for the morning shift, Mr Au, would do the supermarket and miscellaneous purchases with his own credit card for the family, and such would also be reimbursed by the husband/ACE.  All her club bills, medical expenses and expenses in Beijing were also paid by the husband. In addition to all these, the husband would pay her a cash allowance every month, and extra cash when she went travelling, family trips, and also donations.

589.The husband did not dispute that certain credit card expenses of W and Madam Lai were settled through ACE and other companies in the Companies List, although the amounts charged were in dispute and according to him, most of the amounts were business expenses.  The husband had produced an analysis of such expenses which included the wife’s general household expenses, monthly salary of domestic helper, her credit card expenses, various club expenses, and expenses of holidays/family trips which were paid by ACE, the wife’s medical expenses in Beijing which were paid by AC Beijing, and the children’s school fees and their various expenses which were paid by AC Oversea (BVI)[240].

590.The husband further said the cash allowance of HK$20,000 per month alleged by the wife was paid by ACE/R2.

591.The wife’s expenses claimed by her in her Form Es were as follows:

	1st E (20.02.10)[241]	2nd E (12.09.12)[242]
	HKD	HKD
Part 4.1 General	212,000	200,088
Part 4.2 Personal	495,999	294,378
Part 4.3 Children	172,533	107,500
Total	880,532	601,966

592.For the purpose of the MPS application, she had reduced her claims to HK$596,666 per month[243].

593.As section 7(1)(b) of MPPO indicates, the process of evaluating “needs” involves assessing the financial needs, obligations and responsibilities which each of the parties has or is likely to have in the foreseeable future in the light of present and foreseeable resources.  In  LKW v DD , the following passage in the conjoined appeals of Miller v Miller and McFarlane v McFarlane[244] in respect of “needs” was quoted by Ribeiro PJ[245], and I so repeat hereunder:

“When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties’ housing and financial needs, taking into account a wide range of matters such as the parties’ ages, their future earning capacity, the family’s standard of living, and any disability of either party. Most of these needs will have been generated by the marriage, but not all of them. Needs arising from age or disability are instances of the latter.”[246]

594.Further, as Ribeiro PJ has pointed out in LKW v DD[247], “Baroness Hale in Miller/McFarlane stressed that the parties’ needs should be ‘generously interpreted’.[248] Accordingly, in trying to ensure that each party and their children have enough to supply their needs set at a level that equates, in so far as resources allow, to the standard of living they enjoyed during the marriage, those needs should not be assessed according to some perceived lowest common denominator, but with flexibility in the light of all the relevant circumstances.[249]”

595.Mrs Remedios submitted that the wife had failed to provide sufficient documentation to support her alleged monthly expenses, and that those provided did not support the amounts claimed by her.

596.I accept this, but the wife’s case was also supplemented by her oral evidence.

597.First of all, the most important of the wife’s needs would be her housing needs. Throughout the marriage, her housing needs had been provided for.  I find that the flat where she and the children had spent most of their time, compared to other residences in Hong Kong was the Grand Panorama Flat.  In particular, I find that since 2004, the Grand Panorama Flat had been the home of the wife as well.  By comparison, she was living at the Estoril Court Flats for only about 4 or 5 years.

598.The Grand Panorama Flat is about 160 sq m, with a balcony, a maid’s room, a living room and a dining room, and was partitioned into a master bedroom and 2 bedrooms.  Neither the husband nor the wife was required to pay any rent for the Grand Panorama Flat during the marriage. Having said this, there was a mortgage, and every month repayments had to be made.

599.I am of the view that an unencumbered flat of equivalent standard of the Grand Panorama Flat should be provided for the accommodation of the wife and the children.  The agreed valuation of the Grand Panorama Flat was HK$24m.

600.In connection with the transfer or purchase, there will be legal costs and stamp duty payable.  The wife had also provided an estimate of HK$1m for extensive renovation of the Grand Panorama Flat[250]. Whether it be renovations of the Grand Panorama Flat or another flat, I am satisfied the wife would need a reasonable amount for renovating and furnishing the accommodation to a comfortable standard for herself and the children.

601.I thus find to meet the wife’s housing needs, she will need at least a sum of HK$30m.

602.The other item of capital needs would be cars.  The wife said she needed to purchase a family car, a Japanese model 7 seater, and another private car, and she estimated these 2 cars would cost HK$1m. However, it seems from her 2^nd Form E, she had already bought a Benz and was paying for it by instalments.

603.As for her utilities and management fees, I find the monthly amount set out in her 2^nd Form E of about HK$9,500 reasonable.

604.Regarding her other expenses under the heading ‘General’, her evidence was rather confusing.

605.For some reasons, for  her  ‘Food’ expenses, she put down ‘nil’ in  her 2^nd Form E, but then claimed ‘Household’ expenses of a total of HK$ 88,000 per month, paid by cash and by credit cards[251] .  In her 1^st Form E, she had claimed HK$28,000 per month plus her credit card expenses, and ended up a total of almost HK$175,000 per month.  She had also included the credit card expenses for Madam Lai, who was said to be one of the primary carers of the children and Madam Lai had used her own credit card for the children’s expenses.  For some reasons, she also included the monthly minimum payment for the credit cards for this item.  There was clearly overlap.

606.As mentioned earlier, in the past, Mr Au was responsible for all the supermarket and miscellaneous purchases for the family, and he would pay with his own credit card, and would be reimbursed by Ms Lo through ACE.   For the HK$28,000 per month claimed by the wife in her 1^st Form E, according to the wife this would be the amount paid by Mr Au[252].

607.To substantiate the amount of HK$28,000 per month, the wife relied on a bundle of receipts/documents obtained from Mr Au for November 2009[253]. Mrs Remedios had said that those receipts/documents amount to only about HK$24,000, from which a sum of about HK$18,240 should be deducted, as they were unreasonable amounts of roaming and IDD charges on mobile phone, medical fees for Madam Lai, questionable amounts for purchases of health products  and purchase of health products for R2.  The husband thus said the amounts paid by Mr Au for household expenses would only come to about HK$5,800 per month.

608.I have to say I find the way the wife listed/categorized her expenses was not helpful.  Normally, ‘Food’ expenses would be for food for the family at home, from supermarkets and/or wet markets, and ‘Household’ expenses would be for general purchases for household items, such as toiletries, detergents, dry cleaning etc.  Mr Chow produced an extract of the wife’s credit card expenses in his Closing Submissions[254], from which it could be seen there were very few supermarket or ‘daily expenses’, and that most of her credit card expenses were for ‘Meals out of Home’, travel, or entertainment/expenses.  In any event, such extract only covered miscellaneous months from September 2007 to August 2009, and one was not able to work out an average for such items.

609.Although the wife did not produce sufficient documentary evidence to support her ‘Food’ and ‘Household’ expenses under the Part 4.1,  I find that  there must be such necessary expenses for a family of 3, excluding Madam Lai, namely the wife and two children, plus  one domestic helper .  According to Ms Lo, the food expenses for R2 alone came to about HK$15,000 per month.  Although the children may not be at home that often, I find HK$50,000 per month for both ‘Food’ and ‘Household’ would be reasonable, and this item would include purchases of health products.

610.The wife and the children had available the use of cars and two drivers during the marriage.  Now that the children are older, with the daughter a full time university student, and the son being 15 years old, they will probably be going out on their own with friends. I am of the view that one driver would be reasonable.  The wife said the children would use the 7 seater for school and for weekends, the family would use the other car.  I am satisfied that the wife would require the use of two cars for herself and the children.  The salary of the driver was HK$13,000 per month, but as seen from his employment contract[255], the driver would be entitled to overtime allowances, if required to work overtime.  The wife claimed HK$17,000 per month for the driver including MPF and insurance, and another HK$21,500 per month for the expenses of the car, including the instalment payment for the Benz.  In my view, the total amount of HK$38,500 per month is reasonable.

611.The wife and the children had had the services of two domestic helpers throughout the marriage, and again now that the children are older, I think the services of one helper is reasonable.  The wife had produced the helper’s contract dated 23 March 2010[256]. The then minimum salary and food allowance for a foreign helper was HK$4,320 per month, and now the minimum salary has gone up to HK$3,860 per month, and food allowance to HK$1,000 per month.  There would be insurance of  at least HK$1,000 pa, and extra cash which the wife said she would pay the helper for working on holidays on occasions, and also airfares at least once every two years.   Allowing all these, I find a reasonable amount for one helper would be HK$5,500 per month.

612.To summarise, under the ‘General’ of paragraph 4.1 of Form E, I find a sum of HK$103,200 would be reasonable for the total expenses thereunder:

Utilities and Management Fees	HK$9,500
Food and Household	HK$50,000
Car	HK$38,200
Domestic Helper	HK$ 5,500
Total	HK$103,200 pm

613.The above would include ‘General’ expenses for the children as well.  Neither Counsel had addressed the issue of apportionment.  As the children will often be at school, I would apportion their share of the above expenses to be HK$20,000 each per month, which will result in HK$63,200 per month for the wife’s share.

614.The wife’s ‘Personal” monthly expenses in paragraph 4.2 of her 2^nd Form E as set out by her, and excluding her litigation costs, were:

Meals Out of Home	HK $12,000
Transport	$1,000
Clothing/Shoes	$0
Personal Grooming	$6,000
Entertainment/presents	$5,378
Medical/Dental	$1,000
Expenses in Beijing	$19,000
Total	$44,378

615.The wife had also claimed about HK$2,103 for her mobile phone expenses, and monthly credit card expenses of HK$45,000 for herself, HK$20,000 of Madam Lai’s credit card expenses, and also credit card minimum repayment of HK$18,000 per month.  According to Mrs Remedios, the average monthly expenses in total on the wife’s 9 credit cards from January 2007 to January 2010 (prior to her 1^st Form E) was about HK$64,386.59. 

616.As for Madam Lai’s credit card expenses which were previously paid through ACE, I understand that these were expenses for the children paid by Madam Lai and reimbursed subsequently.  According to the wife, Madam Lai has her own business and company which is in fact helping her pay the rent of her present accommodation.  I am not satisfied that there is any legal obligation on the part of the husband to pay Madam Lai’s personal expenses.

617.In addition to paying her credit card expenses, the wife said the husband used to pay her HK$20,000 per month by cheque plus cash allowances of another HK$100,000 per month, and extra US$10,000 to $20,000 per month when she had to travel by herself or with the children.  The husband admitted the wife’s credit card expenses and Madam Lai’s credit card expenses were paid by ACE and the children’s expenses were paid by AC Oversea (BVI).  He said for a short period of time HK$20,000 was paid to the wife by cheque, but he said from his recollection, it was from the account of ACE.  He denied the wife received any extra cash.

618.It was the wife’s evidence during the trial that for travel she would sometimes pay by credit card, and sometimes by cheque. 

619.I accept the wife’s evidence in relation to her expenses.  It appears from Annexure 1 to Mr Chow’s Closing Submissions that the expenses on the wife’s credit cards were mostly for travel, entertainment/present, meals out of home, medical care.  Prior to her filing her 1^st Form E, her average monthly credit card expenses was about HK$64,386.  Although this could have included so called “business travel” to Beijing in relation to AC Beijing for the Auction Project, I accept that the wife will continue to travel to Beijing for her acupuncture/medical treatment, and I accept her evidence as to the costs of such treatment.  I also accept what she said that she would want to continue her charitable work through the foundation she had set up.  She may also need to travel to Beijing to deal with the Beijing Litigations.  I find that she will continue to have Beijing expenses.

620.I further accept the wife’s evidence that the husband was paying her extra cash of about HK$100,000 per month and special cash for travelling, in addition to the HK$20,000 monthly cheque.  This, together with the HK$64,000 per month, would come to HK$184,000 per month.  However, some of these amounts included ‘Food’ and ‘Household’, and other expenses listed under the ‘General’ expenses.

621.Doing the best I can, bearing in mind what Baroness Hale had said that the parties’ needs should be ‘generously interpreted’, I find that a reasonable amount for the wife’s ‘Personal’ expenses for all items to be HK$120,000 per month.

622.To summarise, the wife’s share of the ‘General’ expenses of HK$63,200 per month plus her ‘Personal’ expenses of HK$120,000 per month come to HK$183,200 per month, and I find that  her ‘financial needs’  are in this region.

623.As for the children, the husband is still complying with the Undertakings in the MPS Order, and in his 2^nd Form E, he had set out an amount of about HK$53,838.67 per month which was being paid for by him.  Out of this amount, the children’s school/university fees, according to him, was HK$25,327 per month, and extra tuition fees were HK20,800 per month.

624.Leaving aside school/university fees and extra tuition fees, the wife claimed the following expenses for the children in her 2^nd Form E:

School books and stationery	$10,000
Medical/dental	$2,000
Extra curricular activities	$5,000
Entertainment/presents	$5,000
Holidays	$16,000
Clothes/shoes	$10,000
Lunches and pocket money	$10,000
Other transport	$1,000
Piano lesson, instead of HK$5,900	$12,400
School charity + Oxfam	$6,200
Grooming	$3,500
Total approximately	HK$81,000 pm

625.Further, as mentioned earlier, I find the children’s share of the ‘General’ expenses under paragraph 4.1 in the Form E is HK$20,000 per month each.   In view of the spouses’ lifestyle during the marriage, even though the wife was not able to provide full supporting documentation, I find the children’s total expenses, excluding tuition fees and items covered by the husband, should be in the region of HK$100,000 per month.

626.As set out in the Open Offer Letter dated 8 November 2012 from the husband’s solicitors to the wife’s solicitors, the husband was prepared to provide an undertaking to pay all school fees for full time education for the children against the wife’s production of valid invoices or receipt thereto.  The husband was also willing to undertake to pay for lunch fees, travelling, private tuition fee on academic subjects or other education expenses for the children not exceeding HK$15,000 per month.

627.I will accept the husband’s above undertakings.  In addition to this undertaking, I am of the view that a further amount of HK$50,000 per month will cover the children’s other reasonable financial needs.

V.   OTHER MATTERS IN THE S 7 EXERCISE

628.The husband said the spouses had led a frugal life style. During the marriage, even though they did not have exclusive occupation, their matrimonial home was for about 4 or 5 years at the Estoril Court Flats, which were very spacious flats of about 330 sq m each.  The Grand Panorama Flat was not small by Hong Kong standards. According to the wife there were 4 domestic helpers at Estoril Court Flats.  She and the children had the services of two helpers at the Grand Panorama Flat, and there seemed to be a couple more at the Estoril Court Flats. There were two drivers, one day and one night.  In my view, they had enjoyed a high standard of living.

629.The husband and the wife are now respectively 54 and 52.  I have found that the duration of their marriage to be about 20 years.

630.The wife had said she had developed a tumour after birth of the son, but there was no evidence of this caused any disability. There was in fact evidence of either of the spouses suffering from any physical disability. Even though the husband had provided a medical report from Dr Pon, I do not find that there was any sufficient evidence that he was suffering from any mental disability.  There was no evidence of the wife suffering from any mental disability.

631.Throughout the marriage, the husband had spent considerable amount of his time on litigation and the wife had fully supported him in this respect.  Both of them had participated in charitable activities.  Even after the spouses started to live apart, the wife continued with such activities for the 3 Foundations and I am satisfied that she had made as much contribution to the welfare of the family as the husband, if not more.

632.There was no sufficient evidence of any ‘gross and obvious’ marital conduct, or conduct which this court finds inequitable to disregard.

W.   THE HUSBAND’S VARIATION SUMMONS

633.The husband’s Variation Summons was mainly based on the ground that R2 had withdrawn financial support for him, and that he had financial difficulties.  I do not find there was any sufficient evidence that he had financial difficulties as alleged by him,  in view of my findings on the husband’s income and/or earning capacity, property and/or financial resources.

634.Mrs Remedios had ,however,  raised a technical point on the continuance of the MPS Order after the wife commenced her Part IIA application , namely  pursuant to s 3 of MPPO , the MPS Order should cease to be payable on  determination of the suit, and by the wife commencing the Part IIA application, the 2^nd Proceedings had been determined. The MPS Order was made in the 1^st Proceedings and continued in the 2^nd Proceedings. On 14 March 2012 Poon J, upon granting leave to the wife to issue the Part IIA application, ordered that notwithstanding the general stay of the 2^nd Proceedings certain orders were to continue to have effect until further order, and the MPS Order was one of such orders.  In my view, Poon J’s order had the effect of a fresh interim order made pursuant to s 29 AD of MPPO (“Interim Order”).   The wife and the children were clearly in “immediate need of financial assistance” since the husband had unilaterally ceased to comply with the MPS Order since November 2011.   In light of what I have said in the earlier paragraph, I will dismiss the husband’s Variation Summons.  As for the wife’s Judgment Summonses, I will allow 3 months for the husband to pay off all arrears, failing which there be liberty for the wife to restore her Judgment Summonses for a direction hearing.

X.   DISCUSSION/CONCLUSION

635.As mentioned earlier, Mr Chow had submitted that the court should pierce the corporate veil or in any event the court should follow the dissenting judgment of Thorpe LJ and make orders for transfer of assets of WS (HK) and ACE.  This I have declined to do.  Mr Chow then submitted that the wife’s “fall back” position is to rely on “judicious encouragement”.  His submission was made before the recent Court of Final Appeal judgment of KEWS and NCHC[257]. Ma CJ commented in KEWS that the use of the term “judicious encouragement” had caused confusion among judges and practitioners and in his view, it would be better if this term were no longer to be used[258].

636.Step 1 in the s 7 Exercise is to ascertain the assets of each party to the marriage.[259] In KEWS, Ma CJ has stated that the court is not restricted to taking into account only those assets which in law represent the property of either spouse, as s 7(1)(a) of MPPO is widely drafted to include “other financial resources” of the parties, and such resources will therefore include those assets or resources to which the relevant spouse has or is likely to have access but to which he or she may not have a legal entitlement. Further the court is not constrained to look only at the present position but looks into the financial resources which a party actually has (or should have) at present or which that party is likely to have in the forseeable future.

637.Ma CJ has further stated that the width of the wording of s 7(1)(a) of MPPO will include financial assistance made by third parties to the parties to a marriage.

638.I have found that the husband’s net known assets were in the region of HK$280,000,000 plus financial resources in the past totaling almost $4.7m per month.  I do accept these figures were on very rough basis.  The wife’s net known assets were in the region of HK$11,000,000.  The total net known assets were in the region of $291,000,000.

639.Step 2 in the s7 Exercise is the assessment of the parties’ financial needs.  I have assessed the monthly financial needs of the wife to be HK$183,200 per month, and, in accordance with the Duxbury Calculations produced by the spouses’ agreed expert, a capital sum required to produce this monthly sum will be in the region of HK$51.25m.  This, together with the wife’s housing needs of HK$30m will make a total of about HK$81.25m.  I have said I will assume the husband’s financial needs to be similar to the wife, which means HK$183,200 per month, and similarly a capital sum of HK$51.25m will be required.  So far as his housing needs are concerned, I find that there was no sufficient evidence that he had moved to the Tung Choi Flat.  I find he should be still living in the Estoril Court Flats.  Even if he did move out, his housing needs should be similar to the wife’s.  Under my order, the husband will have an ongoing obligation to pay for the children’s maintenance until each of them reaches 18 or completes full time education.

640.Step 3 of the s7 Exercise is to decide to apply the sharing principle.  The wife’s case was that all the husband’s net assets are ‘matrimonial property’ and therefore she should be entitled to 50% of the value thereof.  In the last Open Offer letter in November 2012 from her solicitors, she sought, among other things, a lump sum of HK$100m for herself.  Then, on the final day of the hearing, she sought a transfer of 500 out of the 1,000 shares in MVI (HK), which the husband transferred to WS (BVI), in addition to HK$100m.

641.The Estoril Court Flats, the Kennedy Road Flat, and Macau Property held by WS (HK) were all acquired by R2 prior to the spouses’ marriage.  Although the Grand Panorama Flat and the Hunghom Offices were acquired by ACE after the spouses’ marriage, I accept that the funds for the purchase of all the landed properties held by WS (HK) and ACE came from R2.  The mortgage payments came from R2.  As stated by Ribeiro PJ in LKW v DD, the source of an asset is a material factor and may provide a reason for excluding it from the sharing principle[260]. Thus, where assets were acquired from a source wholly external to the marriage, such as by gift or by inheritance, this may provide a reason from departure from the equal sharing principle.

642.Having said this, the total value of the husband’s assets/financial resources were not ascertainable, since his beneficial interest in the companies was only calculated from the net values of landed properties.  As Ribeiro PJ has said in LKW, the parties have an important duty to ensure that the court has sufficient information regarding their assets, and a party failing to do so will run the risk of the court drawing adverse inferences and robustly attributing assets to him/her, or making adverse costs orders[261]. As I have said earlier, although the wife also failed to make full and frank disclosure of her means, her failed paled against the husband’s, and I find the husband’s lack of full and frank disclosure much more serious.

643.Having considered all the circumstances of this case, I am of the view that this is a case where there are surplus assets/financial resources after meeting the spouses’ financial needs, and I am of the view that a fair and equitable capital sum for the wife should be HK$120,000,000.  This together with her assets will give her about $131,000,000, or about 45% of the total known assets.  In my view, this is a fair and equitable capital sum for her.  I am of the view that the husband will be able to pay the sum of $120,000,000 within 3 months.

644.As for the children, I have said earlier in the judgment that the children’s financial needs are HK$50,000 per month in addition to the husband’s undertakings.  This is the order I will make.

Y.   ORDER

645.The effect of my order is thus:

(a) Upon the husband undertaking to pay all school/university fees for full time education for the children against the wife’s production of valid invoices or receipt thereto until they reach the age of 18 or complete full time education, whichever shall be later, and

(b) Upon the husband undertaking to pay for lunch fees, travelling, private tuition fee on academic subjects or other education expenses for the children not exceeding HK$15,000 per month until they reach the age of 18 or complete full time education, whichever shall be later

(i) The husband shall pay to the wife periodical payments of HK$50,000 per month for the benefit of each child until he/she reaches the age of 18 or completes full time education, as from 1 April 2013 and thereafter on or before the 1st day of each calendar month.

(ii) the MPS Order/Interim Order shall cease to have effect as from 1 April 2013.

(iii) the husband’s disposition of shares registered in his name in the following companies to AC Oversea(BVI) be set aside:

3 shares in WS (HK)

2 shares in AC Ltd

2 shares in AC International

2 shares in AC International Property

2 shares in AC International Video

2 shares in AC International Holdings

1 share in F & B International

2 shares in AC International Film

2 shares in AC International Culture Studies Foundation

1 share in ACOversea Nominee

(iv) the husband’s Variation Summons be dismissed;

(v) the husband shall pay off all arrears under the MPS Order/Interim Order within 3 months, failing which there be liberty for the wife to restore the Judgment Summons for a direction hearing (30 minutes)

(vi) thehusband shall pay the wife a lump sum of HK$120,000,000 within 3 months of the date of this order;

(vii) Upon the husband’s payment of the lump sum in full, the wife shall deliver vacant possession of the Grand Panorama Flat on “as is basis” to the husband or his nominee.

(viii) Upon the husband’s payment of the lump sum in full, thewifeshall transfer to the husband or his nominee all the shares registered in her name in WS (HK) and all AC Group of companies and other companies, save for KF Foundation or MTD Ltd, at nil consideration.

(ix) Upon the husband’s payment of the lump sum in full, the wife’s claims for financial relief in these proceedings shall stand dismissed.

(x) There be liberty to apply in relation to implementation of this order.

Z.   COSTS

646.I order that the husband and R2 shall, jointly and severally, pay all the wife’s costs of and incidental to her Part IIA application and this dismissal of the Variation Summons.  I order that the husband and R2 shall, jointly and severally, pay those legal costs incurred by those witnesses served with the subpoenae.  I further order the husband and R2 shall, jointly and severally, pay those costs of R4, R5, and R6.  There be no order as to costs for R7.  There be a certificate for two Counsel for all parties.

647.The above are orders nisi, which shall be made absolute after 21 days.

648.Finally, I wish to express my gratitude to all Counsel for their assistance to the court.

Mr Enzo WH Chow, Mr Eric HK Leung, Mr Chan Hei Ching, instructed by C T Chan & Co, for the Applicant

Mrs Lisa D’Almada Remedios & Mr Samuel Yip, instructed by Tso Au Yim & Yeung, for the 1^st Respondent

Mr Li Chau Yuen SC and Mr Adrian But, instructed by B C Chow & Co, for the 2^nd Respondent

Mr Li Chau Yuen SC and Mr Adrian But, instructed by Simon C W Yung, for the 3^rd Respondent